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 May-2022 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 24th May 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 May 2022 expiry F&O contracts from Wednesday, 25th May 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 (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, 24th May 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 Oil Options contracts on 17th May, 2022 will be converted into Futures contracts. 

To avoid square-off, ensure that you maintain sufficient margin for the Futures contracts before 10.00 PM on 17th May 2022.

16th May 2022 is a settlement holiday on account of Buddha Purnima. Due to this, all equity trades placed on 13th and 16th May 2022 will be settled on 18th May 2022.

To help you understand what this means, we’ve simplified the details below.

What’s a settlement holiday?
Settlement holidays are when markets are open but settlement of your trades do not take place as per the usual T+2 cycle because either the depositaries (NSDL and CDSL) are closed or banks are closed on that day.

How does this holiday impact your trades?
Since the settlement date denotes the final transfer of ownership of shares and not the day you made the trade, a holiday in between causes a delay in the final transfer of shares.

What will be the impact of the Settlement Holiday on 16th May 2022?
On account of the settlement holiday on Monday, 16th May 2022 note the following impact:

1. All trades placed on 13th and 16th May 2022 in the Equity segment will be settled by 18th May 2022.
2. All trades placed on 13th May in the Derivative segment will be settled on 17th May 
3. All shares bought on 13th May will be visible under T1 holdings on 16th May but you will only be able to sell them from 17th May onwards
4. The credit bill amount for all segments on 13th May will not be available for trading or withdrawal purposes on 16th May
5. Withdrawals will not be processed on 16th May 2022 

You can also check a list of future settlement holidays here.

Indus Towers Limited (INDUSTOWER) conducted a meeting with its Board of Directors on 5th May 2022. As per this meeting, it has declared, to the Exchange, an Interim Dividend of ₹11  per equity share on equity shares of ₹10/- each, of the Company.

The record date for the purpose of payment of dividend is 17th May, 2022

Adjustments for Futures Contracts:
The base price of the Futures contracts on 13th May 2022, will be the reference rate less aggregate amount of dividend i.e.₹11. The reference rate for this purpose shall be the daily mark to market settlement price of the relevant futures contract. 

Adjustments for Options Contracts:

The full value of dividend i.e. ₹11 would be deducted from all the cum-dividend strike prices on the ex-dividend date.
 

To know more, read the circular here.

Note: For all positions taken before 13th May 2022, you may see a slight deviation in the carried forward (c/f) average price of INDUSTOWER due to the corporate action mentioned above.

Oracle Financial Services Software (OFSS) conducted a meeting with its Board of Directors on 4th May 2022. As per this meeting, it has declared, to the Exchange, an Interim Dividend of ₹190  per equity share on equity shares of ₹5/- each, of the Company.

The record date for the purpose of payment of dividend is 17th May, 2022

Adjustments for Futures Contracts:

The base price of the Futures contracts on 13th May 2022, will be the reference rate less aggregate amount of dividend i.e.₹190. The reference rate for this purpose shall be the daily mark to market settlement price of the relevant futures contract. 

Adjustments for Options Contracts:

The full value of dividend i.e. ₹190 would be deducted from all the cum-dividend strike prices on the ex-dividend date.
 

To know more, read the circular here.

Note: For all positions taken before 13th May 2022, you may see a slight deviation in the carried forward (c/f) average price of OFSS due to the corporate action mentioned above.