Announcements

As per a SEBI mandate, physical settlement is compulsory if a trader holds a position in any Stock F&O contracts on expiry date.

What is Physical Settlement?

In a Stock F&O contract, when there is an open position that has not been squared off by its expiry date, Physical Settlement takes place. This implies they have to physically give/take delivery of Stocks to settle the open transactions instead of settling them with cash.

Examples of physical settlement:

Futures

Long positions of 1 lot of Reliance, 250 quantity at Rs. 2000 i.e. Rs. 5 lakh contract value

F&O = 20% charges i.e. Rs. 1,00,000. This means, you are required to give Rs. 1 lakh, but if you decide to physically settle then you need to have a complete contract value of Rs. 5 lakhs.

Short positions of 1 lot Reliance 250 quantity at Rs. 2000 i.e. Rs. 5 lakh contract value

F&O = 20% charges i.e. Rs. 1,00,000. This means, you are required to give Rs. 1 lakh, but if you decide to physically settle then you need to have the holdings of 250 quantity of Reliance and Rs. 1 lakh margin money till expiry date.

Options

Long - 1 lot of Reliance, 250 quantity for strike price of Rs. 2000 Call (CE) Options.

If the underlying price of Reliance is greater than the strike price of Rs. 2000, then the contract is said to be ITM (In-The-Money). If you wish to go for physical settlement, you need to maintain a free ledger balance of Rs 5 Lakh in your account, else physical settlement would not be done.

Long - 1 lot of Reliance, 250 quantity for Strike price of Rs. 2000 Put (PE) Options.

If the underlying price of Reliance is lesser than strike price of Rs. 2000, then the contract is said to be ITM (In-The-Money). If you wish to go for physical settlement, you need to provide the Stocks (shares) equal to the lot quantity positioned to be available in Demat account, else physical settlement would not be done.

Please note -- 

• -> Short ITM PE options, treatment would be similar to Long ITM CE options.
  Free ledger balance equal to the contract value to be maintained.
• -> Short ITM CE options, treatment would be similar to Long ITM PE options.
  Holdings shares of lot quantity positioned to be available in Demat account.

What is the process for Physical Settlement on Upstox?
To opt for physical settlement on Upstox, you need to provide your consent first and here are the details for the same:

• -> To provide your consent for physical settlement of open Stock F&O contract(s) with July 2023 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 25th July 2023.
• -> Based on your consent, Upstox will evaluate whether your position qualifies for physical settlements and if there is sufficient  ledger balances / holdings (whichever applicable) is available.
• -> Kindly, plan your trades keeping in mind that you will not be able to trade in fresh positions in the current July 2023 expiry F&O contracts from Wednesday, 26th July 2023 onwards. 
• -> Correspondingly, position conversion(s) on carry forward of any stock futures positions shall also not be permitted.

What other impact could this have on your positions?
Your position will automatically be squared-off on expiry day at 12:00 PM in case:

• -> You have not provided your consent for physical settlement
• -> You provided your consent for physical settlement and do not have Ledger Value (equal to contract value) / holdings available for the physical settlement of your positions.
• -> In a case of funds / holdings not being available for all the open positions, we will execute square offs for all the positions. Thus no partial funds / holdings evaluation for the expiring positions will be considered by our team.

What else to keep in mind?
Delivery margins would be applicable as per Exchange norms on all the existing long ITM (In The Money) stock option positions in a staggered manner as explained below:

• -> 10% of delivery margins computed on expiry -4 days EOD (Friday)
• -> 25% of delivery margins computed on expiry -3 days EOD (Monday)
• -> 45% of delivery margins computed on expiry -2 days EOD (Tuesday)*
• -> 70% of delivery margins computed on expiry -1 day EOD (Wednesday)*

• -> To avoid margin shortages, Upstox would be blocking such (above mentioned) delivery margins from Beginning of the Day (BOD) instead of End of the Day (EOD).
• -> If the positions are not squared off for any reason (e.g: non-liquidity), then the contract would have to be settled physically and you would be liable to pay the entire amount of the settlement.

* If you have opted for physical settlement, you would be required to fulfil the entire funds (contract value) / holdings requirement by EOD on Tuesday, 25th July 2023.

In case of spread contracts, you are advised to provide margins for both the legs  since the risk of one leg square off by you anytime would result in physical settlement of the other leg.

Brokerage in Physical settlement:

Since there is a substantial increase in effort and risk to settle these F&O positions resulting in physical delivery, if F&O positions result in physical delivery brokerage will be 0.25% of the physical settled value. For all the netted off positions brokerage will be 0.1% of the physical settled value. All physical settled contracts (Futures & Options) will also carry an applicable Exchange charge.

And that’s all. Keep a watchful eye on this page for more updates from Upstox!

All ITM Crude Option contracts on 17th JULY 2023 will be converted into Futures contracts. 

To avoid square-off, ensure that you maintain sufficient margin for the Future contracts before 10.00 PM today.

Reliance Industries Limited (RELIANCE) has declared to the Exchange the issuance and allotment of 1 equity share for every 1 equity share of Reliance Industries Limited held by existing shareholders.The record date for the purpose of determining shareholders who will be applicable for this is 20th July 2023.

Due to this corporate action, keep in mind the follow impact on your F&O contracts

• 1. All existing contracts in the underlying RELIANCE with expiry dates 27th July, 31 August, 29th September shall expire on 19th July 2023 and shall be physically settled as per the mechanism specified in NCL Circular no.67/2018 (Download no.NCL/CMPT/38039) dated 15th June, 2018.)
• 2. You need to maintain the full value/stock (in case of short position) of the RELIANCE position contract if you wish to take physical delivery of shares.
• 3. No fresh position will be allowed under the F&O segment in RELIANCE from 18th July 2023 
• 4. All positions in the existing futures and options contracts on the underlying RELIANCE shall cease to exist pursuant to the final settlement on 19th July 2023
• 5. RELIANCE positions with insufficient fund value or stock (in case of short position) will be squared off anytime after 10 AM on 19th July 2023 on a best effort basis
• 6. Collateral Margins (Margin Pledge) on Reliance Ltd. will be subject to a 50% haircut value from 14th July  2023, onwards
• 7. All MTF positions in Reliance Ltd will be either squared off or converted to delivery, based on the availability of funds on 19th July 2023
  

You can also refer to the circular here: NSE/FAOP/57525

Due to the merger between HDFC Limited and HDFC Bank, trading will be suspended in HDFC Limited from 13th July 2023. 

Due to this keep the following impact in mind:

• - You will not be able to trade in HDFC Limited from 13th July 2023 onwards and your HDFC Limited holdings will not be visible from 13th July 2023
• - This is done to determine existing shareholders in HDFC Limited as on 13th July 2023
• - 42 fully paid-up equity shares of HDFC Bank Ltd. shall be issued and allotted for every 25 fully paid-up equity shares held in HDFC Ltd as on record date, 13th July, 2023
• - The fractional share amount for these will be directly credited to your primary bank account as and when the trustee appointed by the company sells the shares

We hope this helped you understand the impact of the HDFC Bank merger better. You can even refer to the exchange circular here →
Amalgamation of Housing Development Finance Corporation Ltd (Scrip Code: 500010)

Happy Trading,

Team Upstox

We can't wait to share some exciting new updates in our MTF (Margin Trading Facility).

Applicable from 17th July 2023, you can now enjoy MTF Positions with lesser upfront margins! 

• - Instead of just flat 50% margin, enjoy these margins:
  
  A. For F&O Stocks = VAR + 3 times ELM
  B. For Non F&O Stocks = VAR + 5 times ELM

• - That’s not all, the overall MTF exposure will now be up to ₹50 lacs.

Keep in mind: 

• - All new positions from 17th July, 2023 will be as per the new margin requirements mentioned above. 
• - All the existing positions taken up till 17th July, 2023 wherein margin has been blocked at 50% of position value would be converted into VAR + ELM based margin on 9th August, 2023.
• - As per the process laid down by the regulators, whenever you take MTF position, you would be prompted to create a future pledge at the CDSL systems in favour of RKSV Securities India Pvt. Ltd – MTF Account. 
• - Kindly enter the OTP that you would receive to confirm the pledge by 7.00 PM on the trade day to continue the MTF position
• - All OTP non approved position(s) would be converted to normal trade and appropriate actions would be initiated.
• - Refer to our latest T&C here: Margin Trading Facility | Terms & Conditions

We hope to continue to serve you with such good news.