Physical settlement means if you hold a position in any Stock Options contract, at expiry, you will be required to give/take delivery of stocks. The physical settlement is restricted only to stock derivatives. Physical settlement of index options is not applicable. Index contracts are cash-settled only.

To avoid the complexity of physical settlement, it is highly recommended for a trader to square off all positions before expiry.

To mitigate these potential costs, the SAMCO RMS Policy has been updated to include the following measures:

1. All open positions in these stocks’ contracts by the end of the business day preceding the Expiry Day will be treated as MIS positions upon the market’s opening on the Expiry Day. These positions will automatically be set for square-off.
2. Product types MIS, CO & BO shall continue to be available without Additional margin and shall be squared off after 2:00 PM.
3. All such outstanding positions in these physical derivative contracts of Expiry shall be considered MIS positions and will be automatically squared off after 2:00 PM.
4. No fresh positions in NRML shall be permitted in these scrips on the expiry day for the current month. Product types MIS/BO/CO shall continue to be available and shall be squared off after 2:00 PM.
5. No position conversion or spread orders shall be allowed in these contracts on the expiry day.
6. Fresh position on expiry only available in MIS product type till 1:00 PM

Margin Requirement Policy for Stock Options during Physical Settlement:-

• Click Here to calculate the margin requirement during physical settlement period.

For those with positions in these stocks, there are two options:

Option 1 – Rollover the positions using spread contracts either manually or by the end of trading on the day prior to the Expiry Day.

Option 2 – Manually square off positions on the Expiry Day before 2 PM, considering them as MIS positions. Traders who wish to carry positions to the next month can exit these MIS positions for the current month and enter new positions in the next month’s contracts, selecting either the MIS or NRML product category based on their preference.

In the event that neither Option 1 nor Option 2 is executed, SAMCO RMS will automatically square off open positions (which are outstanding as MIS) at 2 PM on the Expiry Day.

• Important Note: The policy may be changed at discretion of the RMS team. 

Wishing you successful trading!

The post Physical Settlement policy for Stock Options Contract first appeared on Support | Samco.

POA was optional for the clients to submit, stockbrokers were not allowed to insist clients submit it.

To maintain more transparency and keep it simpler, a separate document is introduced ‘Demat Debit and Pledge Instruction’ (DDPI) (Annexure-A)

SEBI issued a new circular SEBI/HO/MIRSD/DoP/P/CIR/2022/44 on 4th April 2022 regarding the execution of ‘Demat Debit and Pledge Instruction’ (DDPI) the aim of DDPI is to replace the Power of Attorney.

The role of the Power of Attorney was to give the stockbroker and the depository participant authority to transfer securities towards deliveries/settlement obligations and pledging / re-pledging of securities of the investors.

This circular was to come into effect from July 01, 2022, but now SEBI has decided to extend the implementation date of the aforesaid circular to September 01, 2022.

From 1st September 2022, all the stock brokers can collect DDPI from their new clients instead of collecting POA. 

What will be the Role of Demat Debit and Pledge Instruction (DDPI)?

DDPI’s role will be similar to POA, DDPI will allow the stockbroker to perform the activities on behalf of the investor and make their day-to-day activity easy. 

Previously if the investor has not submitted his POA to the broker, then the broker needs to collect an Electronic delivery instruction slip (E-Dis) every time when the investor wants to perform a transaction. 

Imagining doing this every time an investor place an order was significantly burdening for both investor and the broker.

To avoid these night terrors, POA was collected.

Now DDPI will be collected in replace of POA. To ease the day-to-day activity of the investors.

Even now clients have the option to opt for DDPI or to complete settlement by using a physical Delivery Instruction  Slip  (DIS)  or electronic  Delivery  Instruction  Slip  (eDIS) themselves. 

Investors who have already submitted their POA to the stockbroker will be valid until the investor revokes it. Submission of DDPI is applicable for clients who have not submitted their POA and for the new clients who will be on-boarded from 1st September 2022.

DDPI is a new type of document that will play the same role as POA. 

DDPI will be mentioned as a part of the Voluntary Document in Annexure-1 of SEBI circular no.CIR/MIRSD/16/2011 dated August 22, 2011.

In the case of POA, investors had to submit a physical copy to the stockbroker but DDPI has changed the game.

Point to note that in DDPI investors can sign it digitally but it’s not enough. Unlike other documents in the onboarding flow. But now DDPI shall also be adequately stamped. 

Digital DDPI will help the investor to get on board easily and save time in order to send the hard copy of the POA to the broker.

The execution of DDPI is a result of the use of the authority granted under Sections 11(1) of the Securities and Exchange Board of India Act, 1992, and 19 of the Depositories Act, 1996, to safeguard the interests of investors in securities, encourage the growth of the securities markets, and regulate their operation.

If you are a SAMCO customer and wish to submit your DDPI click here –>

The post SEBI’s New Circular Regarding Execution of Demat Debit and Pledge Instruction (DDPI) first appeared on Support | Samco.

At times, your orders may get rejected due to some reason & the reason shown by the system reads like gibberish. We understand that it can be frustrating & you can potentially lose out on a trade while on the phone with our customer care team. So to help you understand why your order got rejected and how to modify your order for the trade to go through we are introducing – Rejections simplified!
It is our endeavour to help you self-serve yourself whenever you get a rejection while putting trades in our system. Instead of wasting your time on the phone, you can just check the reason for rejection in the below table, and rectify the same.

The post Understanding RMS Rejections While Placing Orders & Samco first appeared on Support | Samco.