RMS Policy
The following document describes the risk management policy followed by Bonanza. Please read it carefully as it pertains to your trading activity. The policy is applicable to all the segments of Bonanza Portfolio Limited & Bonanza Commodity Brokers Private Limited.
Bonanza Portfolio Ltd. is a registered stock broker of The National Stock Exchange of India Ltd. (NSE), Bombay Stock Exchange (BSE). All these exchanges follow online trading systems and have a settlement system of T+1 in Capital Market segment and T+1 in derivatives segment for Daily mark to market & Final settlement (including Currency Derivatives). Bonanza is using both the ODIN software (as provided by Financial Technologies Ltd.) / XTS – Software and also has inhouse developed Mobile App “Bigul” for trading in Capital Market and Derivatives segment.
Bonanza’s group companies are licensed broking entities in the Commodities market as well and are also registered/ licensed Depository Participants. Therefore, there is a need to consider the risk management issues on two fronts viz. meeting the requirements of the Regulators / Stock Exchanges on risk containment issues and setting its own operational guidelines with proper parameters to combat various risk related issues like regulatory risks, market risks, client risks, employee risks etc.
Further, the risk management processes are designed to ensure that the senior management periodically/continuously receives relevant information and is also updated on various issues, both regulatory as well as operational, required to understand and mitigate the risks.
It shall be noted that the policies and procedures envisaged in this document are subject to changes from time to time, depending upon our internal risk management framework, market conditions and external environment.
Bonanza allocates exposure limits to its clients against the “Funds” brought in by them and lying in the credit of such Client in the Books of Bonanza.
The different components of the “Funds” acceptable to Bonanza for this purpose are:
Bonanza has prescribed a policy for effecting a margin (generally referred to as the “haircut”) on various components of the “Funds” brought in by a client to avail Exposure limits as well as to meet Exchange or Market determined Margins while trading on the Derivative market segments. However, the RMS department will have the powers to impose any changes or modification, to the said percentages as per market scenario, Volumes of the scrip, market capitalization of the scrip, volatility, and keeping view of SEBI or exchange circulars/ prescriptions. Haircut will be modified from time to time by RMS Department after taking records of the scrip on the parameter mentioned below.
Further, the Deposit / Value against the Pledge securities is governed by Script wise limit assigned by SEBI / Exchanges for the client, trading member and Clearing member.
Clients can place orders in two products: -
Margin Trade for other than Illiquid Script’s: - While the Exchanges has different margin for each scrip based on the volatile of the scrip. However Generally, as a thumb rule, it has been decided that a client shall be granted an intraday exposure upto 4 times of the net value of his Net Deposits after the imposition of the Margins/ Haircut in securities for trading in cash segment across all exchanges for trading in the Cash markets.
Delivery Trades: - A client shall be given exposure 1 times of his Net Funds for buying in cash segment across all exchanges of the Net Fund balance in the account of the client.
Credit For Sale: - Client is allowed to purchase, Upto 100% of the value of the shares sold as delivery, the other share/s except the script's that he has sold in other words Re-purchase of the delivery share sold is not allowed. If the Client has sold pledged Share. Limit against sales sold will not be allowed.
When you sell shares from your demat account, the system gives you a default trading limit of ₹2 lacs on the same day (T Day)
Clients can place orders in two products in the Derivatives segment:
Intraday Trades: - After implementation of Peak margin guidelines, a client shall be given margin limit of only 1 times of his Net Deposit for trading in the equity derivative segments across all exchanges.
Carry-forward Trades: - Client shall be given margin limit of only 1 times of his Net Deposit for trading in the equity derivative segments across all exchanges .100 % Upfront margin (SPAN+ELM) is required from the client before placing the order.
Derivative expiry week delivery margins: -On the Derivative Expiry week Delivery margins shall be levied/Physically marking, no fresh positions in carry forward product will be allowed in the Stock's Future & options current expiry contract, clients will only be allowed to square off their existing positions.
Delivery on F&O expiry: -If there are in any net outstanding position of the future of the share along with net outstanding ITM/OTM call & puts resulting in net delivery position as delivery buy or delivery sell by the client, we will check the for delivery buy for the clear funds with us of the client and for delivery sell the delivery in hand in the DP account with the client with bonanza .If it is supported it will be permitted otherwise it will be marked as “Do not exercise”.
50-50 cash component of the margin by the client: - As per the recent regulatory guideline client should have minimum 50% cash component of his derivative margin used including peak margin. In case of any shortfall of the cash component of the margin the same shall attract interest @ .04% per day on the cash component shortfall amount.
Margin/Intraday Square-Off: - All outstanding trades in margin/Intraday in cash & Derivative segment are squared up by the RMS Team after 3.15 pm. As Currency Derivative segment are squared up after 4.45 pm & Commodity Derivative are squared up after 11.20 pm.
Further, the RMS department also has the discretion to reduce / change the exposure in any or all of the segments for a particular client, or any segment or all segments as a whole, with or without any prior information in extra ordinary situations.
a) Clients With POA/DDPI in favour of BONANZA- Bonanza shall do the EPI/PAYIN of the shares sold by the clients whose POA/DDPI of the bonanza.
b) Clients without POA/DDPI With EDIS Registration: - Bonanza Provides the facility of linking such client of their Demat A/C (Both in NSDL & CDSL) with us. After such linking by the client, the client can sell these shares through EDIS system under which such shares sold are blocked by the DP in the beneficiary account of the client. Pay-in of such EDIS blocked sale transaction is done by Bonanza. No additional upfront margin for such sale is required from the clients.
c) Clients without POA/DDPI Without EDIS Registration: - In such cases full upfront margin is to be available with bonanza before placing any order. The clients have to ensure himself the EPI/Pay-in in time to avoid any Auction.
If a client’s position begins to incur an MTM loss, the following steps will be initiated:
Important Notes:
For the purpose of calculating M2M loss, the threshold limit is on the basis of Net Deposit available at the start of the trading day any additions less any payments during the day.
Alert / Warning Messages: System generated alert messages shall be sent to clients on their mark to market loss reaching 50% & for every 10% increase in MTM loss thereafter. Messages are sent on the registered mobile number of the clients. subject to available of connectivity of the vendor Further, any position being squared off by RMS dept., appropriate information shall be sent to the clients.
Bonanza restricts clients from trading in less liquid scrips like ASM/GSM/IRP (list of which is released by the exchanges also). Bonanza can restrict trading of those scrips also where it deems fit that trading in these shares will lead to price manipulation or creating artificial volumes.
For the risk mitigation purpose, RMS dept. shall review such list on regular basis to decide to allow or restrict trading in any scrip / contract. The list is decided after considering the market scenario, Volume, Open positions, market capitalization, etc.
Trading in newly listed shares are subject to the high market risks and rate fluctuations; the chances of higher volatility are more. The dealing in newly listed shares will be allowed considering the applicable margin to be 100%.
As per Bonanza’s existing policy, debit balance of all clients is maintained at 70% of the value of the collateral provided to Bonanza. However, on reaching 70% or above, the client is required to clear the debit balance or infuse more collateral / Funds. If at any moment the debit reaches 80% of the collateral value, the RMS Department may liquidate the collateral.
Please note that interest is not charged on margin against collateral. However, if the Bigul has funded cash component of margin required in FNO segment, Bigul will charge client an interest of 0.04% per day on the peek cash margin funded. e.g- Total approved collateral value Rs.1,00,000/- Margine utilised- Rs. 1,00,000/-
Required cash -50% of Rs.1,00,000/- = Rs.50,000/-.
Ledger balance – Rs. 25,000/-
Cash Short-Rs.25,000/-
Interest for the day – Rs.10/-
B- If the pledge security is cash equivalent (attached list of cash equivalents securities) the same can be utilise for both cash and collateral as per exchange circular and no interest would be charged on cash component of utilised margin.
As per the Exposure policy of Bonanza, it is decided that clients shall not be allow to carry debit balances more than 5 days. If the debit balance continues on T+5th day, the clients’ collateral to the extent of debit balance may be liquidated by the RMS Department. However, after this period of 5 days, company may not allowed Client to take up any fresh positions unless T+5 debit amount is liquidated on FIFO basis. This policy is followed to ensure that the clients do not carry the debit balances (covered by the Collateral with Bonanza) on regular basis. The shares purchased by client & remaining unpaid may be kept by Bonanza in CUSA a/c (Client Unpaid Securities Account) which will be transferred to client account of receipt of payment or will be sold and payin done if debit balance not liquidated by the client within T+5 day
Clients will be pre-intimated on T+5 day about their ageing debit balance and that their collateral can be liquidating against ageing debit balances through SMS on their registered mobile number.
Effective immediately, the following haircut structure will apply to Exchange-approved shares based on their corresponding Exchange VAR:
Exchange VAR up to 49%
Exchange VAR between 50% and 79%
Exchange VAR above 79%
Note: This policy is applicable only to Exchange-approved shares.
Unapproved shares will continue to be treated in the same manner as before (i.e., 100% haircut)