Risk Management

MCCIL has put in place robust risk management system to mitigate the settlement risk. The liquid assets placed by the members with exchange /clearing corporation as collateral plays a significant role in risk management.

Margins

Initial margin: The initial margin shall be charged on the gross open position of member participating in retail market as under:

10% for the securities with rating AA and above
25% for all other securities.

Collection of Initial Margin:

The initial margin shall be collected on an upfront basis by adjusting against the total liquid assets of the member at the time of trade.
The initial margin shall be collected on the gross open position of the member. The gross open position for this purpose would mean the gross of all security-wise net positions across all the clients of a member including his proprietary position.
For this purpose, there would be no netting of positions across different settlements.
The initial margin so collected shall be released along with the pay-in, including early pay-in of securities.

Mark to Market (MTM) margin:

MTM margins shall be collected from the members as a security towards their future settlement obligations. MTM margin is collected wherein the transaction price is less than the end of the day close price of the security for the sell position. Similarly, MTM margin is collected wherein the transaction price is greater than the end of the day close price of the security for the buy position. If the security is not traded for the day, then close price would be latest available close price.

Margin shall not be applicable for the Institutional Market, RFQ and reported deals which are settled under DVP-I settlement.

Margin Exemption

A member can avail the margin exemption by choosing securities and funds early pay in option. The early pay in of securities and funds give an opportunity to member/clients to deliver the stock/funds before the settlement date and release the blocked margin for utilization.