What is Margin Trading / Trading in Margin Segment at ICICIdirect.com?

In margin trading, you take buy/sell positions in stock(s) with the intention of squaring off the position within the same settlement cycle. If, during the course of the settlement cycle, the price moves in your favour (rises in case you have a buy position or falls in case you have a sell position), you make a profit. In case the price movement is adverse, you incur a loss. However, you also have the option to take/give delivery of buy/sell position respectively if you have sufficient cash/securities to do so.

Normally to buy shares, you have to place (ensure availability of limit) 100% of the order value, while to sell shares, you need to have shares in your demat account. However, margins are blocked only to safeguard against any adverse price movement. With margin trading, you can leverage on your trading limit by taking buy/sell positions much more than what you could have taken in cash segment. However, the risk profile of your transactions goes up.

 

How is margin trading different from trading in Cash segment?

Buy/sell transactions in Cash Segment are settled by delivery unless squared off within the same settlement. Whereas in Margin trading, sell transactions are squared off unless converted into delivery (cash segment), Margin Buy positions which are marked with square off mode as 'Broker' will be squared off unless converted to delivery (cash segment) and Margin Buy positions which are marked with square off mode as 'Client ' will not be squared off by the system but it will be the customer's responsibility to square off such positions before the stipulated time (stipulated time is available on the site on the Margin product buy page in the 'Help' link besides the Square off mode). The time when the Margin open positions will be squared off (ie End Of Settlement (EOS) process) would be specified in the Open Margin Positions or Pending for Delivery screen everyday. For example, when you place an order to buy 100 shares of Reliance in the cash segment, your intention is to pay for and receive the shares in your demat account. However, if the same order were to be placed in the margin segment, your intention would be to sell those shares subsequently in the same settlement at a higher price and thereby make a profit on the same. However, if the price falls subsequently, there may be a loss.

Since a cash position is meant to be settled by delivery, the required cash or securities are blocked in full. For example, if you place an order to buy 100 shares of Reliance, 100% of the order value is blocked from your limit and if you place an order to sell 100 shares of Reliance, 100 qty of Reliance shares are blocked in your demat account. On the other hand, in a margin order, only a specified % of the order value is blocked from your limit. A sell order in the margin segment can be placed even without having any stock in demat account. However, unlike the sell order in the cash segment which can be placed without having any limit, a sell order in margin can be placed only if sufficient limit is available. The most important thing to understand is that though you can leverage on your trading limit with margin trading, the risk profile of your transactions goes up substantially.

What does 'Broker Square off' and 'Client Square off' mean in Margin product?

Buy orders/positions under the Margin product now have a facility whereby customers can select the mode for squaring off their Margin positions. 'Broker' or 'Client' are the square off modes available under this facility.

1. Broker:Under this square off mode, all unexecuted Margin Buy orders as well as Margin Buy positions that are marked under 'Broker' square off mode will be identified as intra day and will be cancelled/squared off respectively by ICICI Securities Limited (I-Sec) during the EOS process for the current settlement which would be run at the discretion of I-Sec.
2. Client:Under this square off mode, all unexecuted Margin Buy orders as well as Margin Buy positions that are marked under 'Client' square off mode will not be cancelled/squared off by I-Sec during the EOS process for the current settlement. The onus to square off such positions before the stipulated time (T+ 2 trading days) will lie on you failing which the positions would be squared off by I-Sec on best effort basis during the EOS process run for the earlier settlement.

Please note that all Sell orders/ positions will necessarily be marked under the Broker square off mode only.

 

What is meant by 'Margin Positions' page?

The 'Margin Positions' page on the site is the page which displays margin open positions taken in the current settlement and provides you the facility to:

1. Add margin - You can add additional margin against positions taken in the current settlement
2. CTD (Convert to Delivery) - You can convert margin position to Cash position and take delivery of the same
3. Square off - You can place square off order against your position using this link
4. Change mode - You can change the mode of the positions taken in the current settlement from Broker to Client and vice-versa

What is mean by 'Pending for Delivery' (PFD) page? What are the details available on the PFD page?

The 'Pending for Delivery' (PFD) page on the site is the page which displays all your open Margin Buy positions taken in Client square off mode which were not squared off by you in the earlier settlements. The PFD page is similar to the Margin Positions page. The following details are displayed on this page :

1. Exchange, Trade Date and Settlement Number
2. Stock Code
3. Open Quantity
4. Cover Order Quantity
5. Average Price at which the position was taken
6. Current Price of the scrip
7. Margin Amount
8. Amount Payable
9. Minimum Margin
10. Profit / Loss amount
11. Available Margin Amount
12. Convert to Delivery Quantity
13. Profit / Loss %
14. Squared Off quantity
15. Margin Square off mode - Whether 'Client' or 'Broker'

The significance of these details are explained in the FAQs below.

The positions will remain in the Pending for Delivery page till the number of days specified by I-Sec from time to time. After the expiry of the days mentioned, these positions will be squared off by the risk monitoring system's EOS process on a time mentioned by I-Sec and displayed on this page.

 

Can I trade in Margin at any time during the day? Can I place a Margin order at 3.25 pm.?

You can trade in Margin till 3.30 pm (or till the market is open). However, after the End of Settlement (EOS) process for the day is run, you will be permitted to take or square off only Buy positions in Client square off mode and positions can be taken only in scrips for which the facility to choose the Client square off mode is available.

 

Which stocks are eligible for margin trading? Why is the stock list restricted to specific scrips only?

At present, only select shares have been enabled for trading in the Margin product. These stocks currently account for more than 95% of the trading volume on the bourses. Only those stocks, which meet the criteria on liquidity and volume have been enabled for trading under the Margin product.

I-Sec reserves the right to stock selection for margin and may, at its sole discretion, include or exclude any shares from the margin list without any prior intimation.

 

How do I place a margin buy/sell order?

To place a Buy order in Margin, you need to visit the 'Buy' page and select 'Margin' in the 'Product' drop down option. You will have to select the 'Square Off Mode' for the order as either 'Broker' or 'Client'. All other order parameters remain the same as in the Cash product.

To place a Sell order in Margin, you need to visit the 'Sell' page and select 'Margin' in the 'Product' drop down option. All other order parameters remain the same as in the Cash product.

For further assistance, you may refer to the 'Help' section on the respective page.

 

Can I place short sell orders (i.e. sell shares which I do not hold in DP)?

Yes, you can place short sell orders in the Margin product. However, you will have to square off the position on the same day before the EOS process is run as you cannot have an open net sell position at the end of the settlement cycle.

 

Do you block the shares in DP when a sell order is placed in the margin segment?

No. Unlike a sell order in the cash segment, securities are not blocked in your demat account at the time of placing a sell order in Margin.

 

Can I trade in Margin and Cash on the same day in the same scrip?

Yes. You can trade in Cash and Margin on the same day in the same scrip. However, if you are trading in Cash, you cannot choose Client square off mode or change the mode to Client for your Margin orders or positions respectively. The mode of square off for Margin orders in such cases would be 'Broker' by default.

 

Can I convert my pending margin order into an Order for Cash Segment?

No. Only the executed margin position can be converted to delivery (cash segment) and not the pending orders in margin. In such case, you can cancel your margin order and place a fresh order in cash.

 

Can I take Margin position with client mode if unsettled position exists in the Cash product?

No. You cannot take Margin positions with Client mode if there is any unsettled position in Cash. All unsettled positions in Cash can be viewed under the Securities projection page under Equity.

 

Can I choose different square off modes for 2 different orders in the same scrip on same day?

No. You cannot choose different modes of square off for 2 different orders in the same scrip in a day. The mode of square off for your 2nd Margin order has to be the mode chosen during the 1st order placement. This would mean that in a current settlement day you can have margin position or orders in same scrip only in one mode.

 

Can I choose different square off modes in the same scrip in different days?

Yes. You can choose one mode in a scrip on a day and another mode in the same scrip on the next day. Only on same day you cannot have orders/positions in the same scrip with different modes.

 

I hold a position in a scrip in the Pending for Delivery page , can I place Cash orders in the same scrip?

No. You cannot place Cash buy or sell orders in same scrip in which you have a position in your Pending for Delivery page. However, you can opt to Convert to delivery and take delivery of the position which is in Pending for Delivery page or you can place Margin orders with Client or broker mode in such a scrip.

 

How can I place orders in cash if I have position in Pending for delivery page in that scrip?

You cannot place Cash orders till the time there is open position in that scrip in the Pending for Delivery page. However, you can square off the Pending for delivery position in the scrip and place cash orders from the next day in the same scrip.

 

I have squared off my position in Pending for Delivery, can I place Cash buy or sell orders in the same scrip today?

No. You cannot place cash buy or sell orders in the same scrip on the day when margin positions under the Client square off mode are fully squared off. However, you can place fresh Margin orders in the same scrip on the same day. You can trade in Cash in the same scrip from the next trading day of such full square off of positions in a particular scrip from the Pending for Delivery page.

 

Can I place margin order with client mode in a scrip in which I have done shares as margin in Futures & Options (F&O)?

No. You cannot place Margin orders with Client square of mode in a scrip if you have done shares as margin in the same scrip and vice versa.

 

Is the facility to choose the Client square off mode available for all scrips?

No. The facility to choose the Client square off mode is available in select securities and for fresh Buy orders / existing Buy positions only. The facility is not available on Sell orders or modifying unexecuted orders.

Also, the square off mode can be changed during a day anytime before the EOS process for the current settlement is run.

I-Sec, at its sole discretion, reserves the right to enable/disable the 'Client' square off mode for selected securities.

 

How can I know the securities for which the facility to choose the Client Square off mode is available?

To know the list of securities for which the Client square off mode option is enabled, please refer 'Client Square off Mode Enabled' column on the following path:

Trading page < Equity section < Stock list page

The value in this column will be displayed as 'Y' if the facility is available for the security else the value displayed will be as 'N'.

 

Where can I see the square off mode for a buy order placed by me?

The order and the square off mode chosen against the order can be seen in the Order Book, under the column 'Square off mode' . All sell orders under the facility are by default marked under the Broker square off mode.

 

How do I differentiate between margin orders and cash orders in the order book?

To distinguish between the two order types, Margin orders are displayed with a yellow background while cash orders are displayed with a white background in the order book.

 

Can I change the square off mode for an unexecuted / pending Order?

No. You cannot change the square off mode of unexecuted / pending orders. However, you can cancel the order and place a fresh order by selecting a different square off mode.

You can change the square off mode of executed margin orders from the Margin Positions page after the order is executed.

 

How do I see my open positions in margin?

To view the open margin positions created during the day, you can visit the 'Margin Positions' link on the trading page. The margin positions table gives details such as Stock, buy/sell position, open qty, cover order qty, weighted average of buy/sell price at which the position has been built up, current market price, mark to market profit/loss and total margin blocked on the open position.

To view Margin open positions taken in earlier settlements, you can visit the 'Pending for Delivery' page in the Equity Section of your www.icicidirect.com account.

 

How can I change the square off mode of my open Margin positions?

To change the square off mode of Margin positions click on:

1. 'Change Mode' link on the 'Margin Positions' page in case of positions taken in current settlement.
2. 'Change Sq. off mode' link on the 'Pending for Delivery' page in case of positions taken in earlier settlements.

The 'Square off mode' column on these pages displays the current mode of square off chosen by you for that position. ' Change Sq off mode' link will display the square off mode selected which is not currently chosen by you for the position. On clicking the 'Submit' button, you can change the square off mode. For example, if your current square off mode is 'Broker', on clicking the 'Submit' button, you can change the square off mode to 'Client'.

In both cases, you can change the square off mode anytime before the EOS process is run for the day.

 

How many times can I change the square off mode?

You can change the square off mode of a position as many numbers of times as you want till the time the EOS process is run. After the EOS process the square off mode of Margin positions cannot be changed.

 

How much margin would be blocked on placing the margin order?

Initially, margin is blocked at the applicable margin percentage of the order value. For market orders, margin is blocked considering the last traded price of the stock as the order price . On execution of the order, the same is suitably adjusted as per the actual execution price of the market order.

For more details on the margin percentage login to your account and visit the Stock List option in Equity section of the Trading page.

 

Is the margin percentage uniform for all securities?

It may not be so. Margin percentage may differ from security to security and settlement to settlement based on the liquidity and volatility of the respective security besides the general market conditions.

For more details login to your account and visit the Stock List option in Equity section of the Trading page.

 

Is margin blocked on all margin orders?

No. Margin is blocked only on margin fresh orders, which are in the nature of building up fresh positions. Margin orders which are placed to square off existing open buy/sell position (called 'cover orders') shall not attract margin.

For example, if you have a buy position (executed trade) of 100 shares in Reliance in margin and now place a sell order for 100 shares in Reliance in margin, the sell order would not attract any margin as it is in the nature of a cover order. However, if you place a sell order for 150 shares, the additional sell quantity of the sell order i.e. 50 shares would attract margin at the applicable margin rate. Such orders can be called 'partial cover and partial fresh order'.

Please note that a cover order is recognized only against an executed order and not against an unexecuted / pending order. For example, if you have an unexecuted / pending buy order of 100 shares in TISCO and want to place a sell order of 100 shares in TISCO at a higher price, the sell order would not be recognized as a cover order and shall accordingly attract margin as in case of any fresh sell order.

 

Is there any impact on the limit after a buy/sell order in margin product is executed?

Yes. Execution of a buy/sell order in the Margin product does impact your limits.

If an executed order results in creation of a new position, the margin blocked on the order gets appropriately adjusted for the difference, if any, in the order price at which the margin was blocked and the execution price. Accordingly the limits are adjusted for differential margin.

If an executed order is in the nature of a cover order, i.e. it results in squaring off of an existing open position in margin either partially or totally, the margin blocked on the open position to the extent squared off, will be released and profit & loss on the square off of such a transaction will be adjusted. Accordingly, the limits will be adjusted for the released margin as well as for the effect of profit and loss on the transaction.

To view the details of your Limits, please click on 'Limit' link on the Equity trading page of your www.icicidirect.com account.

 

When is margin blocked on margin positions released?

When a margin Sell position is closed out (either by squaring off or converting to delivery) or a margin Buy position is closed out (by squaring off), proportionate margin blocked on the position so squared off is released back and added to the limits.

 

What is meant by 'squaring off a position'? What is a cover order?

Squaring off a position means closing out a margin position. You can place the square off order by clicking the ' Square off ' link against the margin open positions. It is always advisable to place the cover order through the 'Margin Positions' / 'Pending for Delivery' page as it will eliminate the error of placing double orders and help avoiding any fresh positions. For example, if you have a margin buy position of 100 Reliance Shares', squaring off this position would mean selling 100 Reliance shares. The order placed for squaring off an open position is called a cover order. In the example, the order placed to sell 100 Reliance shares is a cover order against the open position - 'Buy 100 Reliance Shares'.

 

How do I place a square off order in margin to close my open positions?

To place a square off order for margin open positions created during the day, you may use either the normal buy/sell page or click the 'Square off' hyper link on the 'Margin Positions' page.

To square off Margin open positions created and maintained from earlier settlements, you will have to click on the 'Square Off' hyper link on the 'Pending for Delivery' page.

 

How does the profit and loss get recognized on execution of square off (cover) orders?

Execution price of the cover order is compared with the weighted average price at which the position was built up (as shown in the 'Margin Positions' or 'Pending for Delivery' page) and profit/loss is calculated therefrom.

For example, say you have a margin position - 'Buy 100 Reliance Shares' at an average price of Rs. 100 per share created by the execution of 2 orders - 'Buy 50 Reliance Shares @ Rs. 110 per share' and 'Buy 50 Reliance Shares @ Rs. 90 per share'. If you squared off a part of the position by selling 60 Reliance Shares @ Rs. 105 per share, the profit on such square off would be calculated as:

Quantity squared off * (Square off trade execution price - Weighted Average price of the position)60 * (105 - 100) = 300

 

In case of profit on a margin position or where the Available Margin is in excess of the Margin Required, can I reduce the margin against the position to increase my limit?

Margin (though in excess of the requirements) cannot be reduced by you. The only way margin is released is by canceling an unexecuted margin order (where margin is blocked against a margin order) or by closing out a margin position (where margin is blocked against a margin position).

 

Where can I see the quantity squared off in case of positions taken in the earlier settlements?

The part quantity squared off in case of any positions taken in earlier settlements can be viewed by clicking on the 'Squared off Qty' link present against the position on the 'Pending for Delivery' page.

 

Is it compulsory to square off all Margin positions within the settlement?

Yes. It is compulsory to square off all your open positions (net of what has already been converted to delivery) within the settlement. In case, any Margin Buy position with Client square off mode remains open it will be shown in the 'Pending for Delivery' page.

 

Can I choose not to square off a margin position marked under the Broker square off mode?

Yes, you can choose not to square off a position marked under the 'Broker' square off mode by either choosing the 'Convert to Delivery' option before the EOS is run for the day or changing the mode to Client square off.

 

What happens if for some reason margin positions marked with Broker Square off mode remain open at the end of settlement?

I-Sec would square off the position on best effort basis but the onus lies on you to close out all open positions. If for some reason, the position remains open at the end of settlement, you will have to make all the necessary arrangements for funds/securities for the settlement of the position and shall be fully liable for the consequences (auction/penalty/interest) of the same.

 

What will happen if positions marked for Client Square off mode are not squared off by me in the same settlement?

Buy Margin open positions marked under 'Client' Square Off mode ,which are not squared off by you on the same day, will remain open and will be shifted to the 'Pending for Delivery' page (explained above). These positions are deemed to be intended for delivery by you.

Such positions are to be either 'Converted to Delivery' (cash) or squared off by you before the stipulated time. You can take delivery of such positions by clicking on the 'Convert to Delivery' link on the 'Pending for Delivery' page or square off the position by clicking on the 'Square Off' link on the same page.

In case you do not square off or convert such positions to delivery, these positions will be squared off after the stipulated number of trading days (as decided by I-Sec from time to time) from the day such positions are taken. However, I-Sec may at its sole discretion, square off such positions without any prior intimation to the customers.

 

What does End of Settlement (EOS) mean? What is the stipulated time for running the EOS and which positions are squared off in the EOS?

End of Settlement (EOS) is a process by which specific Margin positions in a particular Settlement, if not squared of by you within the stipulated time, are identified and squared off by I-Sec on a best effort basis.

Two types of EOS processes are run by I-Sec under the Margin product:

1. EOS for current settlement: In this case, all unexecuted Broker square off mode buy and sell Margin orders as well as positions of the current settlement which are marked under the Broker square off mode are cancelled / squared off by I-Sec respectively.
   Based on which kind of positions are open, order cancellation will be done in following manner:
   
   

   S.No. Open Position Pending Orders Action         1 Broker Mode Sell Position Client Mode Buy Cancel     Broker Mode Buy Cancel     Broker Mode Sell Cancel         2 Broker Mode Buy Position Broker Mode Sell Cancel Broker Mode Buy Cancel         3 Client Mode Buy Position Client Mode Buy Not canceled Client Mode Sell Pls. refer next three questions         4 No Open Position Broker Mode Buy Cancel Broker Mode Sell Cancel Client Mode Buy Not canceled

   
   The stipulated time for EOS process for the current settlement is displayed on the 'Margin Positions' page of our site everyday.
   
   
2. EOS for earlier settlements: In this case, the following orders / positions are cancelled/ squared off by I-Sec:
   
   1. Unexecuted square off orders for positions taken in the settlement for which the EOS process is being run.
      
   2. Buy positions of the earlier settlement (appearing in the Pending for Delivery page) which are marked under the client square off mode
      
   3. Buy positions of the earlier settlements (appearing in the Pending for Delivery page) whose square off mode has been changed from 'Client' to 'Broker' square off mode

The stipulated time for EOS process for earlier settlement will be displayed on the 'Pending for Delivery' page of our site everyday. Please note that if a particular earlier settlement EOS could not be run on the stipulated day as per the stipulated time due to any reason then I-Sec at its sole discretion will run the EOS for that earlier settlement on the next trading day.