New Cash Margin Requirements: Impact on smallcase Orders

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With the new FAQs published by the exchanges, several changes were introduced. One important change was that you can use proceeds from selling stocks only after 2 days. In essence, this means you cannot use any margin proceeds from selling a stock/ETF to buy another stock/ETF on the same day (on T-day). This is expected to come into effect from 1st Aug, 2020

These changes can impact different smallcase orders & transactions, as following:

Rebalance Orders

Rebalance orders will need you to hold the complete amount for all included buy transactions

Earlier, during the rebalancing process, the proceeds from sell transactions were used for the buy transactions in the rebalance order. This reduced the overall amount required from your funds/account to complete the rebalance order. If the amount to be received from the sell orders is lesser than amount to be invested for the buy orders, the extra amount required (Buy Amount minus Sell Amount) was utilised from your available margins.

Now with this change, you would need to have the complete amount required for the buy orders in your available funds/margins to place the rebalance order batch.

Manage Orders (Adding & Removing Constituents)

The same will apply to order batches having both buy & sell orders, where you’d require the funds for the Buy orders to be available in your funds/margins before placing the same.

Buy/Invest More/SIP orders

Looking to exit your smallcase(s) completely/partially to buy or invest more into a smallcase on the same day? You can only do so if you have the investment amount required available in your usable margin. The funds from the sell orders will be available to use only on T+2 from the day of selling the stocks

If you’ve any questions, drop us an email at help@smallcase.com.

Rahul Satish

Handles CX at smallcase

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