Announcements

• - Market Orders are permitted only on F&O contracts with traded lots of over 200
• - After-Market Orders (AMOs) can only be placed as Limit Orders, not Market Orders, in BSE Derivatives

When a company announces a Rights Issue, they invite existing shareholders to buy more shares, usually at a discounted price. These shares are known as Rights Shares. After the Rights Issue is announced, the company credits its existing shareholders’ Demat Accounts with something called REs (Rights Entitlements). These REs are also listed on the exchange and can be traded.

IMPORTANT TO NOTE: REs are not the actual Rights Shares. Once you buy or get REs allotted to you, you need to apply for the Rights Shares in the following ways:

• - Online through ASBA (Applications Supported by Blocked Amount) if your bank supports it just like you do for an IPO
• - Online through the RTA (Registrar and Transfer Agent) website https://rights.integratedindia.in/
• - Offline by filling the Composite Application Form (CAF) received in your courier from the company’s RTA and then submitting it at a Self Certified Syndicate Banks (SCSBs) branch.

The 3 companies which have listed REs in August 2024 are:

REs will exist as temporary Demat securities in your account. If they are not used to apply for Right Shares or traded, they will lapse.

To learn more about rights, click here.

All ITM Natural Gas Option contracts on 24st July 2024 will be converted into Futures contracts.

To avoid square-off, ensure that you maintain sufficient margin for the Future contracts before 10.00 PM today.

Due to expected trading volatility on the day of the Union Budget i.e. 23 July 2024, please note the following changes:

Changes in intraday leverages & margin requirements:

• - 2X on F&O Stocks i.e. 50% fund requirement.
• - 1X on Non F&O allowed Stocks i.e. 100% fund requirement.
• - 1X on all Derivatives (Equity, Currency & Commodities) as per the Exchange peak margin requirements i.e. 100% fund requirement.

Changes in other products: 

• - Cover Orders (CO) will be blocked for all the segments.
• - All the above margin-related changes are subject to change, given the market trend on the above-mentioned day
• - In extreme volatility, the risk team reserves the right to close out/square off positions with/without prior notice
  

Disclaimer: All regular RMS rules shall apply. Clients are primarily responsible for intraday open positions. Upstox cannot be held liable if any open position is not squared off. Clients shall be responsible for fulfilling their Net Delivery obligation(s).

As per a SEBI mandate, physical settlement is compulsory if a trader holds a position in any Stock F&O contracts on expiry date.

What is Physical Settlement?
In a Stock F&O contract, when there is an open position that has not been squared off by its expiry date, Physical Settlement takes place. This implies they have to physically give/take delivery of Stocks to settle the open transactions instead of settling them with cash.

Examples of physical settlement:
Futures
Long positions of 1 lot of Reliance, 250 quantity at Rs. 2000 i.e. Rs. 5 lakh contract value
F&O = 20% charges i.e. Rs. 1,00,000. This means, you are required to give Rs. 1 lakh, but if you decide to physically settle then you need to have a complete contract value of Rs. 5 lakhs.
Short positions of 1 lot Reliance 250 quantity at Rs. 2000 i.e. Rs. 5 lakh contract value
F&O = 20% charges i.e. Rs. 1,00,000. This means, you are required to give Rs. 1 lakh, but if you decide to physically settle then you need to have the holdings of 250 quantity of Reliance and Rs. 1 lakh margin money till expiry date.

Options
Long - 1 lot of Reliance, 250 quantity for strike price of Rs. 2000 Call (CE) Options.
If the underlying price of Reliance is greater than the strike price of Rs. 2000, then the contract is said to be ITM (In-The-Money). If you wish to go for physical settlement, you need to maintain a free ledger balance of Rs 5 Lakh in your account, else physical settlement would not be done.
Long - 1 lot of Reliance, 250 quantity for Strike price of Rs. 2000 Put (PE) Options.
If the underlying price of Reliance is lesser than strike price of Rs. 2000, then the contract is said to be ITM (In-The-Money). If you wish to go for physical settlement, you need to provide the Stocks (shares) equal to the lot quantity positioned to be available in Demat account, else physical settlement would not be done.

Please note -- 

• - Short ITM PE options, treatment would be similar to Long ITM CE options.
  Free ledger balance equal to the contract value to be maintained.
• - Short ITM CE options, treatment would be similar to Long ITM PE options.
  Holdings shares of lot quantity positioned to be available in Demat account.

What is the process for Physical Settlement on Upstox?
To opt for physical settlement on Upstox, you need to provide your consent first and here are the details for the same:

• - To provide your consent for physical settlement of open Stock F&O contract(s) with July 2024 expiry visit the ‘Profile’ section on your Upstox account on our App / Web and give your consent from here before EOD on Tuesday, 23 July 2024.
• - Based on your consent, Upstox will evaluate whether your position qualifies for physical settlements and if there is sufficient  ledger balances / holdings (whichever applicable) is available.
• - Kindly, plan your trades keeping in mind that you will not be able to trade in fresh positions in the current July 2024 expiry F&O contracts from Wednesday, 24 July 2024 onwards. 
• - Correspondingly, position conversion(s) on carry forward of any stock futures positions shall also not be permitted.

What other impact could this have on your positions?
Your position will automatically be squared-off on expiry day at 12:00 PM in case:

• - You have not provided your consent for physical settlement
• - You provided your consent for physical settlement and do not have Ledger Value (equal to contract value) / holdings available for the physical settlement of your positions.
• - In a case of funds / holdings not being available for all the open positions, we will execute square offs for all the positions. Thus no partial funds / holdings evaluation for the expiring positions will be considered by our team.

What else to keep in mind?
Delivery margins would be applicable as per Exchange norms on all the existing long ITM (In The Money) stock option positions in a staggered manner as explained below:

• - 10% of delivery margins computed on expiry -4 days EOD (Friday)
• - 25% of delivery margins computed on expiry -3 days EOD (Monday)
• - 45% of delivery margins computed on expiry -2 days EOD (Tuesday)*
• - 70% of delivery margins computed on expiry -1 day EOD (Wednesday)*

• - To avoid margin shortages, Upstox would be blocking such (above mentioned) delivery margins from Beginning of the Day (BOD) instead of End of the Day (EOD).
• - If the positions are not squared off for any reason (e.g: non-liquidity), then the contract would have to be settled physically and you would be liable to pay the entire amount of the settlement.

* If you have opted for physical settlement, you would be required to fulfil the entire funds (contract value) / holdings requirement by EOD on Tuesday, 23 July 2024.

In case of spread contracts, you are advised to provide margins for both the legs  since the risk of one leg square off by you anytime would result in physical settlement of the other leg.

Brokerage in Physical settlement:

Since there is a substantial increase in effort and risk to settle these F&O positions resulting in physical delivery, if F&O positions result in physical delivery brokerage will be 0.25% of the physical settled value. For all the netted off positions brokerage will be 0.1% of the physical settled value. All physical settled contracts (Futures & Options) will also carry an applicable Exchange charge.

And that’s all. Keep a watchful eye on this page for more updates from Upstox!