New Margins On NSE And Their Effect On Trading

New margins on NSE (National Stock Exchange) are effective from the contracts of November Series. Although these were available for trading since two months most people do not trade them as they are not current month.  But with expiry of october contracts tomorrow (29 Oct 2015), november contracts become first month and investors and traders in f&0 segment has to trade them.  As written in my earlier article on 5 lakh minimum lot size f&0 list there is a huge increase in required margins to trade in these contracts.

New margins are not due to change in calculation method of SPAN or additional margins but due to the change in lot sizes which is major one this time. Changes in lot sizes are common earlier too but this time its huge because of SEBI’s requirement of making minimum lot value in derivatives contracts as 5 lakh rupees.  The minimum lot value earlier was 2 lakh rupees only.  This new regulation by SEBI regarding the minimum value of derivative lot increased required margins in most of the contracts that are traded in NSE.

You can find the daily margin requirements to trade in nse fno segment  with initial margin and additional margin details.

Below is the table in which I compared most of the contracts traded in f&0 segment of nse with old lot margin requirement vs new lot values margin requirement.  Please note that I refer old lot as derivatives contracts with minimum 2 lakh value and new contracts as f&o contracts with minimum 5 lakh value.

These are sorted with highest % increase in margins in rupees.  As can be seen the maximum increase in margins is in ADANIENT with more than 1000% increase in margin requirement.  As of now for october contract margin required is just Rs 8530 where as from november contract it is 103000.  The lot size of it is increased from earlier 500 to 6000 followed by unitech with 500% margin increase.

But the increase is not for all stocks. For example there is a huge decrease in margin requirement for MRF for which earlier it was around 6.5 lakh rupees which decreased to around 78000 rupees. Before this SEBI’s new regulation of minimum 5 lakh value for all f&0 contracts, the minimum allowed lot size for stock futures and options was 125.  New lot size of MRF is just 15 against earlier 125.

These new margins may effect the trading pattern and rollovers.  It has to be seen how the liquidity will be effected with the change.  For retail investors trading in options in some of the contracts will require huge amounts.  For example to buy 1 option contract in unitech even with 1 rupee premium requires 77,000 rupees.  Assuming the trading value remains constant there will be effect on liquidity and some small investors may find it difficult to trade with huge increase in margins in most of their stocks.

In Indices, now the margins of both Nifty and Bank Nifty are similar compared to earlier gap in margin requirement.  This may see some traders shifting to bank nifty from nifty contracts.  Actual pattern in trading change, if any, can be noticed with in a week of rollover of next series.

New Margins On NSE From November Contracts and Existing Margins Comparision

ContractOld LotOld MarginNew LotNew MarginChange Rs
ADANIENT5008530600010300194471
UNITECH110001784177000125973108132
JPASSOCIAT80002236548000135006112641
ADANIPOWER4000212102000010680085590
SUNTV50028110200011318985079
JINDALSTEL20002571070009059864888
GMRINFRA1300024213390007322349010
NIFTY2516347754942133074
ALBK20001894560005725538310
JSWENERGY20003120060009427563075
CAIRN10002129030006432043030
RELCAPITAL5002722815008223855010
ORIENTBANK10001854030005599537455
RPOWER400026240120007923052990
WOCKPHARMA125318233759606364240
ACC125218743756601544141
HDIL20002716960008198754818
TATAMOTORS5002876815008679058022
BANKINDIA10001732030005224534925
KSCL250206467506191941273
YESBANK250229887006480641818
RELINFRA5002463313006447439841
SYNDIBANK20002632550006627539950
IFCI8000465802000011725070670
HINDALCO20002565550006457538920
DLF200040789500010247261683
UCOBANK400028600100007175043150
NHPC1100025273270006250537232
NMDC20002562550006316337538
SOUTHBANK900024728220006083036102
JSWSTEEL250284906006884740357
SUNPHARMA250281976006813539938
ASIANPAINT250259066006259736691
DIVISLAB250347016008384649145
LUPIN125299193007229042371
HCLTECH250304006007344843048
LT125233533005641933066
HINDUNILVR250255756006178236207
INDUSINDBK250289926007001941027
AMARAJABAT250318996007701045111
SRTRANSFIN250294736007112741654
OIL5002495912006012035161
IBREALEST400052635900011928966654
SAIL40003050090006860338103
IGL5003081311006831037497
ENGINERSIN10002516322005577630613
TATACOMM5002672611005922132495
TATACHEM5002608811005779731709
LICHSGFIN5003082811006829437466
BIOCON5002824611006257434328
CASTROLIND5002882411006385235028
MCLEODRUSS10002423522005361429379
DHFL10002898322006393834955
AMBUJACEM10002612021005523029110
TATAMTRDVR10003892821008227843350
IRB10003846521008126542800
JISLJALEQS40003585080007228036430
NFTYMCAP5075202151504074920534
KTKBANK20003132540006313031805
TATAGLOBAL20003396540006844034475
IDBI400058030800011692058890
HDFCBANK250347975007010935312
FEDERALBNK40003687080007428037410
PIDILITIND5003531110007113335822
RECLTD10003497520007045035475
RELIANCE250293275005907029743
L&TFH40003394080006836034420
PFC10003484820007018535337
TECHM5003431310006910334790
CESC5003773110007598538254
ABIRLANUVO125336912506784934158
NTPC20003256040006557033010
INFY250360065007250336497
PTC40003407080006860034530
WIPRO5003615810007280336645
CANBK10003642520007334036915
GLENMARK250309165006224331327
ANDHRABANK40003322080006688033660
AXISBANK5003439810006925034852
UPL5003237810006518332805
TATAPOWER40003515080007076035610
SKSMICRO5003606910007260336534
MOTHERSUMI7502769215005574028048
BHARATFORG250305935006156330970
UBL250299155006018930274
POWERGRID20003289540006618033285
SBIN10003043820006123530797
TATASTEEL10003646020007334536885
HAVELLS10003212820006463032502
PNB20003288040006614033260
BHEL10002664020005357526935
HEXAWARE10003234320006502532682
DABUR10003399520006834534350
RCOM40004859380009768649093
COLPAL250307025006158630884
TVSMOTOR10004655320009335546802
M&MFIN10002813520005632028185
BATAINDIA5003297810006597332995
ONGC10003198320006398031997
VEDL20003971540007924039525
JUSTDIAL250352305007003534805
BANKBARODA2000426551258212739472
CNXPSE75197471503779418047
CNXIT2523244454216018916
ASHOKLEY40004585070008078034930
IOB800035740140006279027050
ICICIBANK10003399817005819524197
ARVIND10003585817006134525487
EXIDEIND20004055534006891828363
IDFC20001654533002748910944
SRF250452744007302127747
ADANIPORTS10003765816006069623038
MINDTREE250479254007723629311
HINDZINC20004297532006925626281
AJANTPHARM250487104007849529785
BRITANNIA125499192008043630517
M&M250383784006183723459
HEROMOTOCO125410442006612925085
APOLLOHOSP250421254006787025745
TCS125395282006368324155
HDFC250396194006382824209
CIPLA500435708007018226612
ULTRACEMCO125452342007286227628
CENTURYTEX500380038006121023207
ITC10004447516007163227157
SIEMENS250425344006850425970
STAR250407954006568824893
BAJAJ-AUTO125402372006477724540
IBULHSGFIN500463138007426027947
VOLTAS10003705016005923222182
INDIACEM40004687660007081223936
APOLLOTYRE20004929530007443025135
UNIONBANK20004580530006909023285
IDEA20003874530005840319658
CROMPGREAV20004671530007038823673
TITAN10004382015006600822188
PETRONET20004856030007307324513
FTSE1005025440753816012720
CNXINFRA100246221503565611034
AUROPHARMA500533197007520521886
KOTAKBANK500420747005929417220
CEATLTD5007624670010733831092
GAIL10003981314005599016177
ZEEL10005358513007010616521
GODREJIND10004813013006261514485
DISHTV40005462050006876314143
BANKNIFTY253483130421237292
JUBLFOOD25047417300573029885
HINDPETRO500480636005807410011
IOC10004996812006037510407
OFSS125618521507473212880
BPCL500568346006866611832
DRREDDY125642831507764813365
BHARTIARTL1000447931200541029309
GRASIM125578001506980112001
COALINDIA1000413231200498758552
BEL375567614506829711536
DJIA253523130422777046
MARUTI1257036312570843480
BAJFINANCE12581573310066542-15031
PAGEIND1252204555088501-131954
EICHERMOT1252721572554809-217348
BOSCHLTD1253310592566635-264424
MRF1256469801578078-568902

Leave a Comment

Your email address will not be published. Required fields are marked *