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 October 2022 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Monday, 24th October 2022.

-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 October 2022 expiry F&O contracts from  Tuesday, 25th  October 2022 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 (Thursday)

-25% of delivery margins computed on expiry -3 days EOD (Friday)

-45% of delivery margins computed on expiry -2 days EOD (Monday)*

-70% of delivery margins computed on expiry -1 day EOD (Tuesday)*

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 Monday, 24th October 2022.

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 October 2022 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.

What does this mean?

A company announces a Rights Issue to invite existing shareholders to buy more shares, usually at a discounted price. These shares are known as Rights Shares.

After the Rights Issue is announced, the company then credits its existing shareholders’ Demat Accounts with REs (Rights Entitlements).

These REs are not the Right Shares but the benefit given to existing shareholders to apply for the Right Shares. If shareholders do not wish to apply for these Rights Shares, they can even trade these REs in the market until a particular date. 

To learn more, click here.

What does this mean for Suzlon Energy shareholders?

Existing shareholders of Suzlon Energy company (as of record date 4th October 2022) have 2 options - 

• They can use their REs to apply for more shares of Suzlon (in proportion to their existing shares - 5 for every 21 shares held) at a price of ₹5 per share.
• If they do not wish to apply for more shares, they can even sell their REs in the market.

Note: REs which are neither subscribed by making an application with requisite application money nor renounced, on or before the Issue Closing Date shall lapse and shall be extinguished after the Issue Closing Date.

What dates should one keep in mind?

Last date to apply (Issue Closing Date): 20th October 2022
If you’re interested in applying for the right shares, you can apply on or before this date
Last trading date for RE  - 14th October 2022
If you do not wish to apply for the rights shares, you can trade your REs in the market on or before this date.
Date when Right Shares will be credited - 1st November 2022
Date of listing of Right Shares - 3rd November 2022

How To Apply for Rights Shares?
You can apply for Suzlon Energy Rights Issue 2022 in 2 ways:

1) Online through ASBA (Applications Supported by Blocked Amount) if your bank supports it just like you do for an IPO. 

2) Offline by filling the Composite Application Form (CAF) received in your courier from the company’s RTA and then submitting it at a Self-Certified Syndicate Banks (SCSBs) branch.

Refer to the Exchange circular here: 

BSE: Rights Entitlements of Suzlon Energy Limited

Aarti Industries Limited (AARTIIND) declared to the Exchange the issuance and allotment of 1 equity share for every 4 equity shares held by existing shareholders. The record date for the purpose of determining shareholders who will be applicable for this is 20th October 2022.

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

1.  All existing contracts in the underlying AARTIIND i.e. contracts with expiry dates 27th October 2022, 24th November 2022 and 29th December 2022 shall expire on 18th October 2022 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 of AARTIIND position contract if you wish to take physical delivery of shares.
3. No fresh position will be allowed under the F&O segment  in AARTIIND from 17th October 2022
   AARTIIND positions with insufficient fund value or stock (in case of short position) will be squared off anytime after 12 PM on 18th October 2022 on a best effort basis.
4. All positions in the existing futures and options contracts on the underlying AARTIIND shall cease to exist pursuant to the final settlement on 17th October 2022.
5. The pay-in/payout of the final MTM settlement of all futures contracts on AARTIIND shall be on 18th October 2022 (T+1 day).
6. The physical settlement shall be effected on 19th October 2022 (T+2 day)
7. New contracts in the underlying AARTIIND (with expiry dates - 27th October, 24th November and 29th  December 2022) will begin on 19th October

You can also refer to the circular here: NSE Circular 119/2022

Due to settlement of funds happening tomorrow, 7th October 2022, any fund withdrawal request placed after 8:00 AM tomorrow will be processed on Monday, 10th October 2022.

You can place Instant Withdrawal requests between 11:00 AM to 4:00 PM, they will be processed within 15 minutes. However, keep in mind the guidelines mentioned here for Instant Withdrawal requests to be processed successfully.