+ Expand AllSpan Margin

QWhat is SPAN margin?

A
SPAN margin is the Initial Margin required by the exchanges in F&O segment. It is calculated on a portfolio (a collection of futures and option positions) based approach. The margin calculation is carried out using a software called - SPAN® (Standard Portfolio Analysis of Risk). It is a product developed by Chicago Mercantile Exchange (CME).
QWhat is Exposure margin?

A
In addition to initial (SPAN) margin, exposure margin is also collected. As per the latest exchange circulars, collection of net buy premium, delivery margin, Exposure margin and Mark-to-market losses (MTM) is mandatory
QDoes the SPAN / Initial Margin requirement change during the day?

A
Yes, the SPAN margins are revised 6 times in a day - once at the beginning of the day, 4 times during market hours and finally at the end of the day. Higher the volatility, higher the margins. Client will be required to maintain appropriate margins to avoid margin calls.
QDo I get margin benefit if I have positions on different underlying?

A
No. Margin benefit is not provided for positions on different underlying in F&O segment.
QDo I get margin benefit if I have positions in both futures and options on same underlying?

A
Yes. Margin benefit is provided for positions in futures and options contracts on the same underlying.
QDo I get margin benefit if I have counter positions in different months on same underlying?

A
Yes. In case of calendar spread positions, margin benefit is provided. However, the spread margin benefit is ceased, if any position expires, thus for such cases, margin requirement may increase. The said benefit is removed post expiry of the near month contract.
QIs SPAN margin applied on all Segments?

A
Currently SPAN margin is calculated for F&O positions in Equity Derivatives Segment of NSE only. Currency & Commodity derivatives segments are not covered. Positions in Cash segment not part of SPAN margin calculation.
QIs SPAN margin calculated on all equity F&O positions in NSE for all products?

A
No, for products like Super Multiple in Futures & Options, SPAN margin is not applied. Thus if there is position in Normal category & hedged position to the normal position is under Super Multiple Futures / Options, position under Super Multiple product will not be considered as part of SPAN portfolio margin & client will not get hedge benefit. No cross margin benefit would be provided for hedge positions in Cash segment and derivative segment.
QWhere can I Check which type of Margin is applied?

A
Open Position page under ‘margin type’ will denote the same. For cases where SPAN is the margin type, the margin includes Initial & Exposure margin.
QWhy does SPAN margin for each F&O position doesn’t sum up to the final margin charged for that underlying?

A
Since SPAN / Initial margin is calculated at portfolio level, if there are different positions such that few positions are internally hedged, overall margin charged will be LESS than summation of margin of each position. The benefit, thus received will be displayed as Spread Benefit for respective underlying.
QDo I get margin benefit if my hedging order is open?

A
In case few F&O orders of same underlying are traded, if there are any hedged order that are open, hedge benefit will not be available. However if such orders are partially traded, partial benefits will be available.
QWhy has my margin requirement increased even after squaring up few positions?

A
Normally in case any position is closed / squared-off, margin requirement reduces.

In cases of hedged positions, if any one side of such position is squared off completely or partially, it may result in increase in Margin requirement for existing positions / Open Orders.
QWill the Initial Margin & Exposure Margin charged be same as required by the exchanges?

A
Exchange has allowed members / brokers to collect margin over & above minimum Initial & Exposure margin prescribed by them. For few scrips, based on Kotak Securities internal risk policy, margin requirement might be higher than the minimum requirement.

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