Why does the risk management team of 021 Trade square off positions?
Why does the risk management team of 021 Trade square off positions? Find a clear answer in this FAQ by 021 Trade.
1. Insufficient Margin Maintenance
If the required margin to maintain a position is not available, a margin call will be sent via email requesting the client to add funds. If the required funds are not added within the stipulated time, 021 Trade reserves the right to square off the position. Clients have until 11:59 PM on T day to fulfill the margin shortfall.
2. Reduction in Collateral Value
Positions may be squared off if the value of pledged collateral declines. This can happen due to:
- A fall in the market value of pledged securities
- An increase in applicable haircut percentages
Clients are advised to monitor collateral value regularly. Applicable haircut details are available on the official website.
3. Intraday Position Auto Square-Off
All intraday positions must be squared off before the designated cut-off time. Failing to do so will result in automatic square-off by the system.
- A reminder pop-up will be shown 20 minutes before market close
- New intraday orders will be blocked 15 minutes before market close to avoid duplicate square-offs
Auto Square-Off Timings:
- Equity: From 3:15 PM onwards
- F&O: From 3:20 PM onwards
4. Excessive Mark-to-Market (MTM) Losses
If MTM losses exceed 50% of available funds, the RMS team may take precautionary action.
- A margin call will be issued if unrealised losses cross 50% of collateral value
- Clients must either:
- Add funds or
- Square off positions to reduce losses
During this period:
- Fresh positions will be restricted
- Only position reduction (square-off) will be allowed
- Notifications will be sent via email and trading terminal alerts
If losses continue to rise:
- At 60% of collateral value, RMS will initiate position square-off
- Priority will be given to intraday and F&O positions
- If required, pledged holdings may also be liquidated
