Risk Management Policy – Margin Trading / Loan Against Securities:
- Approved Securities: Margin Trading or Margin Funding is provided against the margin of almost all the securities including listed stocks, units of open ended Mutual Funds schemes, Exchange Traded Funds, Warehouse Receipts of listed Commodities. Loan against securities other than Margin Funding is provided against a list of securities approved by Credit Committee. This list of securities is subject to review by the Committee on a regular basis.
- Margin Requirement: Loan eligibility would be upto 75% of the value of the approved Mutual Fund units and 50% of the value of the approved shares and other securities. However the Risk Management Team may make suitable changes in the margin percentage subject to market conditions and customer risk profile.
- Valuation of the Securities: Securities are valued on a daily basis at the latest available closing rate or NAV as the case may be.
- Loan Eligibility: Loan eligibility or Eligible Loan Amount is set subject to the risk profile of the customer
- Margin Shortfall: Margin shortfall or in other words the difference between Eligible Loan Amount and the current outstanding amount should be cleared by the customer either by submitting additional collateral securities or transferring fund.
- Margin Call: 1st Margin call to replenish the margin shortfall is given to the customer when the outstanding loan amount is 55% of the value of the collateral securities
- Customer is given 2nd Margin call on the outstanding loan amount reaching 60% of the value of the collateral securities
- Liquidation of Collaterals: Collateral securities would be sold up to the amount of shortfall in margin when the customer has failed to replenish the margin shortfall and the outstanding amount has crossed 65% of the value of the collateral securities. The sale consideration of the collateral securities is adjusted against the outstanding loan amount.
- Expiry of the Agreement: Customer would be informed well in advance about the expiry of his loan agreement executed with Hedge Finance Ltd. If the customer fails to renew the agreement within the due date, and he/she has outstanding loan amount, collateral securities for the value of the amount due from the customer including the interest amount if any would be sold and adjusted against the dues.