Why have I been charged margin penalty?

What is a margin penalty?

A margin penalty is a fee levied when there is an insufficient margin in a trading account. Exchanges mandate clients to maintain ample margins for their trades and to transfer funds in case of a margin shortfall, indicating a deficit of funds or margin in the trading account.

What are the types of margin penalties on TradeJini?

Upfront Margin Penalty

Upfront margin is the initial margin required to initiate a trade. If a trader doesn’t have enough margin in their account when entering a trade, then if the broker allows that trade to take place then the penalty will borne by the broker itself.

Example Scenario:

If TradeJini allows a trader to enter a position with a minimum margin of ₹1.1 lakh (SPAN + Exposure), but the trader only has ₹1 lakh in their account, a ₹10,000 shortfall will occur, resulting in a penalty on that amount.

Non-upfront Margin Penalty

Non-upfront margin pertains to the margins that should be fulfilled by the client after initiating a trade, following the upfront margin requirement. Failure to provide the required funds within the deadline leads to a deficit and may result in a penalty.

Additional Information:

For marked-to-market (MTM) losses in futures contracts, the client has time untill T+1 day to add the funds.

Ad-hoc margin requirements added by exchanges due to volatility or physical delivery margins to stock F&O contracts in the last week of expiry are also considered non-upfront margins.

Visit tradingqna.com/t/nse-circular-on-short-margin-penalty-refund/136203/26 for more detailed examples of upfront and non-upfront margin penalties.

If a penalty is charged for non-upfront margins, the corresponding fund statement entry will be posted on the T+6th day, as margin reporting is due on T+5 days.