How is the total gross exposure on a particular day calculated?

3.4.1.1. Margins shortage

2. Gross exposure limit violation
3. Turnover limit violation
4. Funds pay-in shortage
5. Non-receipt of exchange/other dues

1. There may be other exceptional circumstances including large/risky positions/history of fake share delivery / poor settlement performance/non-compliance etc. under which trading facilities may be withdrawn at the discretion of the Clearing Corporation/Exchange

1. What does one do in case trading facilities have been withdrawn on account of gross exposure/turnover violation?
0. In case the trading terminal has been disabled due to gross exposure or turnover violation, the following may be done:

1. Call the nearest regional office of NSE or margin section at Mumbai (contact numbers and fax numbers are given in Section III) to ascertain exact details of amount required as additional base capital (ABC) to reactivate terminal.
2. Provide written instructions for debiting clearing bank account towards ABC, by way of fax. (To avoid this, a standing instruction in the prescribed format as given in Annexure 4 may be given).
3. Ensure that the clearing bank confirms the clear balance in account for the amount required as above.
4. In case of sustained need for higher exposure, one may consider arranging for a bank guarantee or FDR towards ABC.

1. A penalty of Rs.5000/- is levied for every gross exposure/turnover violation and can be avoided by giving standing instructions and making arrangements with clearing bank for providing funds against such requirements.

1. What is the process involved in enabling one’s trading in case one is disabled?
0. The process for enabling trading facility takes the following sequence:

1. Receipt of fax authorizing debit to clearing account for the specified amount
2. Confirmation from banker whether clear balance is available in the account
3. Updating of record on collateral system
4. Forwarding of request to Exchange to enable terminal
5. Enablement of trading facility.

1. Important - Once trading facility has been enabled, users are required to log out and log on to the NEAT application once again.

1. If additional base capital is provided on a particular day, when can one get release of the same?
0. The ABC is released on request. The request may be made in format MABC-2 (for details please refer to our circular number NSCCL/M&S/02856 download reference number NSE/CMPT/01160 dated August 31, 1999).
1. All requests received on or before Monday are considered for release on the following funds pay-in day, normally Tuesday.
2. The amount released will be arrived at after considering the latest exposure (on Monday), and any amount from MABC that has already been adjusted against margins. The balance cash amount, after maintaining a cushion of Rs.5 lakh for the purpose of ensuring no immediate disablement, if any, can be released.
2. If bank guarantee or FDR is provided towards MABC, can cash deposits if any, be released?
0. Yes. To the extent of bank guarantee or FDRs provided, an equivalent amount of cash provided earlier may be released. A request letter may be sent indicating desire for releasing the cash provided earlier. The request should contain details of the Bank Guarantee / FDR against which cash release is sought.
3. Can one request for the release of a Bank Guarantee, FDR or securities that have been given towards MABC? Within how many days can one reasonably expect the release to come through?
0. Release of a bank guarantee or FDR can be done the next working day after the day of receipt of the request for release. Release of securities pledged is normally done on Monday. However, in case of special requirements from the members the securities are released on as and when basis. In this regard, for release of securities, a separate circular (download number: CMPT/1312 dated 26-Nov-1999) has been issued to members.

1. EARLY PAY-IN OF FUNDS AND SECURITIES
1. Can one make an early pay-in of securities and/or funds? Will one get relief in exposure and/or margins?
1. Yes. One can make an early pay-in of securities and/or funds against obligations before the actual pay-in day.
2. Benefit equivalent to the value of advance pay-in is given towards exposure limits by reduction in the cumulative net outstanding position.
3. Margins are also recomputed after making the relevant reduction from the cumulative net outstanding position to the extent of advance pay-in. Volatility margins, if any, applicable earlier are also not charged on the securities paid in. This benefit will be available on the evening of the day on which pre-pay-in is made.
4. In the case of advance pay-in of funds, margins are recomputed after reducing the gross exposure utilized, by the amount of early pay-in of funds. In this case, MTM margin and volatility margin, if any, will continue to be charged.
5. If entire pay-in of all securities and funds obligations for a settlement are made in advance, relief to the extent of the complete margins paid for the settlement is given.
1. How does one avail of early pay-in facility?
1. To avail of early pay-in facility, minimum requirements as under have been specified:

1. If securities are in demat mode, the minimum value of securities in a request has to be atleast Rs.5 lakhs, subject to each security being valued at not less than Rs.1 lakh.
2. If the securities being delivered are in physical form, the minimum value of securities in a request should be Rs.25 lakhs, subject to each security being not less than Rs.5 lakhs.
3. If the securities to be delivered are a combination of demat and physical form, the total value of securities in each request should be atleast Rs.5 lakhs. The value per security in this case too, is required to be not less than Rs.1 lakh per security in case of demat securities and Rs.5 lakhs per security in case of physical securities.

1. In order to effect an early pay-in in demat mode, it is required to (a)give an ‘Irreversible Delivery Out’ instructions to the respective Depository Participant (DP) and (b)to obtain the depository system-generated delivery out instruction report.
1. In order to facilitate giving benefit of this pay-in immediately, a request in the prescribed format PPS – 1 along with a copy of the NSDL report may be sent by fax to the Margin Section, Mumbai
2. Members having chosen RCC for their pay-in and pay-outs are required to give their requests to the respective RCC for expeditious action.
3. For early pay-in of funds, members who have chosen Mumbai for their pay-in and pay-out have to send a request in the prescribed format (PPF – 1) to the Mumbai office while members who have opted for pay-in and pay-out at the RCCs have to forward the request to their respective RCCs.
4. Formats of forms PPF – 1 and PPS – 1 are given in Annexure 3A and Annexure 3B respectively.
5. For further details please refer to circular numbers NSCC/CM/C&S/115 – Download number 1169 - dated September 03, 1999 and NSCC/CM/C&S/117, dated October 04, 1999.

1. How soon can one get benefit after pay-in is effected and the confirmation received by the Clearing Corporation?
0. It is first checked whether the securities in demat mode indicated in request form have been received into the NSCCL pool account through a facility provided by the depository. Where the securities are in physical form, confirmation of receipt is sought from Mumbai Clearing House or respective Regional Clearing House, as the case may be.
1. After the confirmation, details of securities are entered into the system for the purpose of giving benefit for exposure.
2. Estimated time taken to complete formalities and processing is 30–40 minutes.
3. In the case of early funds pay-in, it is first confirmed with the bank whether the necessary funds are available in the account. Once this is confirmed, the estimated time taken to give benefit in gross exposure is 10 minutes.
4. In case requests are received after trading hours, or the shares have come into the pool account after market hours on a particular day, the benefit against margins are given on the same day. The gross exposure benefit will be available on the succeeding trading day.
2. Why does NSE insist on a copy of the Delivery-Out Instruction Report, when the DP says that it is difficult for them to give a copy of the same? Will the IDO number not do?
0. It is possible to verify from the Delivery-Out Instruction Report whether an irreversible delivery out instruction has been given or not. As a result, even if the report says that the shares are in-transit, benefit can be given without waiting for the same to be reflected in NSCCL’s pool account.
1. In the absence of the report, the normal process of checking as mentioned above will have to be followed. On high-activity days when a large number of requests are received from members, checking whether shares have been received in NSCCL pool account are done on a first come - first served basis. This is likely to result in delay in giving benefit for early pay-in since at times, the number of requests pending for verification are as high as 60–70. The Delivery-Out Instruction Report reduces this processing time significantly.
3. Can one make early pay-in of securities that have been traded in the current settlement? If yes, since one does not know the final obligation, how should one go about making this pay-in?
0. Yes, one can make early pay-in of securities that have been traded in the current settlement.
1. The shares may be delivered according to current net sale position. Delivery has to be made to the Clearing House in the case of physical delivery or Irreversible Delivery-Out instructions are to be given to the DP as per the normal practice.
2. The delivery to the Clearing House in the case of physical shares should be made in lot sizes of maximum 10000 shares and should be accompanied with a list containing the distinctive numbers of the shares delivered against early pay-in.
3. Once the final obligation positions are calculated, in case deliveries have been effected in physical mode, it will be the member’s responsibility to arrange to make appropriate delivery lots at the Clearing House and to attach the relevant delivery slips to make full and complete pay-in on the pay-in day.
4. In case shares delivered are in demat mode, nothing more needs to be done.
4. Does one get exposure benefit and benefit on margin at the same time or at different times?
0. If the request for early pay-in is made during market hours and is in order, benefit for gross exposure is given on the same the same day during market hours.
1. The margin benefit due is passed on at the end of day while computing the final margin obligations.
2. In case of requests submitted after market hours, or if shares come into depository account after market hours but before end of day processing begins, then the margin benefit due will be given on the same day, while the exposure benefit will become available on the next day.
5. Once an early pay-in is made, can one get to know how much additional gross exposure and margin benefit is being allowed?
0. The gross exposure benefit is simple to calculate. The gross exposure allowed will increase by an amount equivalent to the value of securities delivered as early pay-in. In other words, one can take additional exposure equivalent to the value of early pay-in.
1. However, ascertaining the exact amount of margin benefit is not such a simple task. This is because, the value of early pay-in has to be deducted from gross exposure utilized as it appears in your consolidated margin report and the gross exposure margin has to be recomputed. Apart from this, the mark to market and volatility margin on the particular securities that have been delivered, have to be adjusted/reduced.
2. In order to arrange for sufficient funds towards daily margins, one may consider approximately 10 – 20 % of the value of one’s total early pay-in as reduced from the margin figure as shown in the consolidated margin report. However note, that this would just be an indicative figure and the actual margins recomputed could be greater or lesser than this figure.
6. Can one make an early pay-in of securities which are in no-delivery?
0. Yes, one may make an early pay-in of securities in no-delivery. However, it is necessary to ensure that the delivery instructions given to the DP mentions the correct settlement type/number in which settlement the securities come into delivery.
1. One should not indicate the settlement number and type in which the securities were traded or when the instructions are being given.
7. In case one wants to make early pay-in of securities in no-delivery in demat form, can one get the corporate benefits one would be normally entitled to?
0. Yes. The details of securities transferred from beneficiary accounts to the pool account in order to make an early pay-in of securities to the clearing corporation during no-delivery period are required to be given in a specific format as prescribed by NSDL, along with an undertaking to indemnify NSDL against any errors. Copies of the same have to be submitted to both the DP as well as to NSDL. Formats of these two documents can be obtained from NSDL office.
8. In case of an early pay-in of securities in excess of obligations, how can one get back securities?
0. In case excess delivery of securities has been made, the excess shares will automatically be released on the pay-out day.
9. Is the early pay-in facility also available for the 3D and rolling market segments?
0. Yes. Early pay-in for these segments will be accepted till the day prior to the day of actual pay-in for these segments.

1. OTHERS
1. Is it necessary to report details of institutional and non-custodial institutional trades?
1. Yes. It is required of every trading member to report details of institutional and non-custodial institutional trades (NCIT) done by them as required as per circular number NSCC/C&S/CM/112 dated August 03, 1999.
2. By what time do one need to do this reporting?