NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Risk Management
Mr. Iyer buys shares in the cash segment through his broker and the position is not squared off. Which margin is collected upfront from him for this delivery-based purchase under the exchange margining framework?
In the cash segment, the margin collected on a delivery purchase consists of Value at Risk margin plus Extreme Loss Margin on the transaction value. Brokerage and securities transaction tax are charges, not margins, and mark-to-market profit is not collected as margin.
- AValue at Risk (VaR) margin plus Extreme Loss Margin on the purchase valueCorrect
- BOnly the brokerage amount
- COnly the securities transaction tax
- DMark-to-market profit credited by the exchange
Explanation
In the cash segment, margins comprise VaR margin and Extreme Loss Margin (ELM), with mark-to-market margin where applicable, applied on the transaction value. Brokerage and STT are costs, not margins. MTM profit is not a margin collected from the client.
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