Futures and Options Trading Courses – ICICI Direct

The margining system is based on the JR Verma Committee recommendations. The actual margining happens on a daily basis while online position monitoring is done on an intra-day basis.

The computation of initial margin on the futures market is done using the concept of Value-at-Risk VaR. VaR methodology seeks to measure the amount of value that a portfolio may stand to lose within a certain horizon time period one day for the clearing corporation due to potential changes in the underlying asset market price.

Initial margin amount computed using VaR is collected up-front. The daily settlement process called "mark-to-market" provides for collection of losses that have already occurred historic losses whereas initial margin seeks to safeguard against potential losses on outstanding positions.

The mark-to-market settlement is done in cash.

Let us take a hypothetical trading activity of a client of a NSE futures division to demonstrate the margins payments that would occur. The client has made a profit of Rs 19, at the end of Day 3 and the total cash inflow at the close of trade is Rs 63, Margins The margining system is based on the JR Verma Committee recommendations.

Futures and Options Trading Courses – ICICI Direct

Daily margining is of two types: A client purchases units of FUTIDX NIFTY 29JUN at Rs Position on Day 1 Close Price. Payment to be made. Payment to be recd.