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What is a daily margin statement and how to interpret it?

As per the exchange regulations, we send a daily margin statement to every client's registered email address. This statement informs the client his/her margin status, i.e. what free margins are available in her/his account in order to take new positions without incurring penalty or charges. There is a definite format for the daily margin statement prescribed by SEBI. 

If you trade across all exchanges, you will receive a combined daily margin statement. A margin statement for a particular exchange will have all the segments included, that is if you trade on NSE EQ (equity), NSE F&O (equity derivatives), NSE CDS (currency derivatives), all the segments will be included in the daily margin statement.

The daily margin statement should be issued on the Trade day (T-Day). The margin statements are available to download from your Console login once the trade process is done for the day. This is usually around 8.30 PM. 

Understanding the Daily margin statement:

Every broker must compulsorily disclose the following details in the margin statement - 

Note - 

1. NSE through this circular prescribed a new margin statement format. We issue the daily margin statements in the new prescribed format. However, the statements downloaded from Console will show the margin statements in the old format, for dates before 9th July 2018.

2. The exchange further released this circular directing the below modifications to the margin statement column headers:  
i) MTM and the column heading i.e. ‘Margin/MTM required by Exchange/CC end of T & T+1 day respectively’ shall be replaced with ‘Consolidated Crystallized Obligation’ and ‘Margin/ Consolidated Crystallized Obligation required by Exchange/CC end of T & T+1 day respectively’.
ii) With respect to futures & options & currency derivatives segments, the term "Mark to Market (MTM)" specified in NSE circular NSE/INSP/43069 dated December 31, 2019 shall be read as "Margin on consolidated crystallized obligation".

Below is an example of a daily margin statement:  

Each of its components is explained below: 

Funds — Shows the closing balance of the respective segment's ledger after reversing the effect of T-day credit in the F&O and CDS segments. Similarly, closing balance in NSE EQ and BSE EQ segments is shown after reversing the effect of T-day and T-1 day credit. 

NSE EQ: Closing balance without margin of the NSE EQ ledger after reversing the effect of T day and T-1 day credit
BSE EQ: Closing balance without margin of the BSE EQ ledger after reversing the effect of T day and T-1 day credit 
NSE F&O: Closing balance without margin of the NSE F&O ledger after reversing the effect of T day credit 
NSE CDS: Closing balance without margin of the NSE CDS ledger after reversing the effect of T day credit 
Mutual Funds: Closing balance of the mutual funds ledger. 

Note - Brokers should maintain separate ledgers for every segment. But as an industry norm, in the margin statement, all pay-ins will be posted to the 'NSE EQ' segment, however, debits will be posted in the respective segment ledger and shown accordingly in the margin statement.

E.g.  Assume you add 1 lac to your trading account. That day's margin statement will have Rs 1 lac posted under the Funds column in the NSE EQ row. The next day if you take a position in F&O for Rs 40000, in that day's margin statement, in the Funds column, the NSE EQ row will show 1 lac and the NSE F&O row will show -40000. The subtotal of the Funds column will show the net amount i.e. 60000 which will be the unencumbered balance available in your account at the end of the day.

Value of Securities (after haircut) — margins received from pledging holdings if any i.e. collateral margins.

Note - At Zerodha, we don't provide margins based on 'Bank guarantees/Fixed Deposit receipts' or 'any other approved form of margins'. So Total margins available will be the sum of Funds & Value of securities after a haircut.

Total upfront margins — This includes the total margins required by the exchange for the positions you have taken if any. Below are the margin values considered for each of the segment:

EQ - Sum of VAR + ELM + Minimum Margin + Additional Margin
F&O - Sum of SPAN margin + Exposure Margin + Physical delivery margin + Additional margin.
CDS - Sum of SPAN margin + Extreme Loss margin + Additional margin

Consolidated crystallized obligation — This column shows the sum of MTM losses if any in the respective segment.

Total requirement — This shows the total amount blocked by the exchange for your position, segment-wise. This is calculated as Total upfront margin + Consolidated crystallized obligation. 

Excess/Shortfall w.r.t requirement by exchange — This column shows the value of 'Total margin available' minus the value of 'Total requirement'

Additional Margin required by the member as per RMS — This column shows any additional margins blocked by the broker. At Zerodha, we charge additional margins for commodity derivatives and physical delivery contracts in their expiry week. Read more here.  

Margin Status (balance with member/ due from the client) — This column shows you the totally free/unencumbered balance that is available for taking new trades on the next trading day.