Announcements

As per SEBI circular no. SEBI/HO/IMD/IMD-I DOF5/P/CIR/2021/635 dated 4th October 2021, the usage of a common fund wallet (pool account) for Stock and Mutual Fund related transactions will be discontinued from 1st July 2022.

What does this mean?

Earlier you could invest in Mutual Funds via funds in your Upstox wallet. And on redemption/sale of units, the funds would be credited to your Upstox wallet from where you could place a withdrawal request.

However, as per the above mentioned SEBI circular, while you can invest in a Mutual Fund from the Upstox platform, the funds for buying Mutual Fund units will be deducted directly from your registered bank account. And on redemption of these units they will be credited to your registered bank account.

What to keep in mind?

• To comply with the above mentioned SEBI mandate, there will be a maintenance activity on our platform from 30th June 2022, 2:30 PM to 1st July 2022, 12:00 PM. During this time you will not be able to buy/sell any Mutual Fund units. Existing SIP transactions will remain unimpacted. 

• A DP (Depository Participant) charge of ₹18+ GST is applicable on the redemption of Mutual Fund units. This will be deducted from your Upstox wallet and not from your bank account.  Ensure you have sufficient funds to successfully redeem your units.

To know more, refer to the Exchange circular here.

As per NCL circular reference NCL/CMPT/52374 dated 23rd May, 2022 and

NSE circular NSE/FAOP/52732 dated 24th June 2022 note the following updates

• The maturity date of Indian Oil Corporation Limited (IOC) contracts expiring in June 2022 shall be 29th June, 2022. You can refer to the Exchange circular here

• Adjustments in open F&O positions in IOC shall be carried out only for contracts expiring in July 2022 & August 2022. To know more about these adjustments, refer to this circular here

• If you have any open IOC F&O positions with June expiry, physical settlement will be applicable. Provide consent for physical settlement before 28th June 2022 or square of your positions or square off your position(s) before 12 PM on 29th June. Tap here to know more

As per SEBI, T+1 settlement cycle is now becoming applicable on all equity stocks.

This is being implemented in a phased manner. The first list of stocks applicable for the T+1 settlement cycle went live from 25th February, 2022. The fifth list of stocks applicable for the T+1 settlement cycle will go live from 24th June 2022.

However, to avoid any pay-in shortage due to this change you will not be allowed to sell T1 holdings of the following stocks on 24th June 2022. But you will  still be able to see them under T1 Holdings.

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 June-2022 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 28th June 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 June 2022 expiry F&O contracts from Wednesday, 29th June 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, 28th June 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 Option contracts on 15th June 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.