Violations
PRISM (Parallel Risk Management System) is the real-time position monitoring and risk management system for the Futures and Options market segment at NSE CLEARING. The risk of each trading and clearing member is monitored on a real-time basis and alerts/disablement messages are generated if the member crosses the set limits.
Clearing members, who have violated any requirement and / or limits, may reduce the position by closing out its existing position or, bring in additional cash deposit by way of cash or bank guarantee or FDR or securities. Similarly, in case of margin violation by Trading members, clearing member has to set its limit for enablement.
The total margins (initial margins and extreme loss margins) on positions taken by a TM are computed on a real time basis and compared with the TM effective collateral. The total margin amount is reduced from the TM effective collateral. Once the TM effective collateral has been utilised to the extent of 70%, 80%, and 90%, a warning message is received by the TM on his terminal. At 100% utilization, the trading facility provided to the TM is withdrawn.
When the open position of any Trading member/FPI/MF exceeds the position limit , following penalty shall be levied for position limit violation. Further Additional margin shall also be levied in case of position limit violation by Trading member.
In the event of violation of position limits by an entity, the following monetary penalty would be charged
to the clearing members for every day of violation:
1. 1% of the value of the quantity in violation (i.e., excess quantity over the allowed quantity, valued at the closing price of the security in the normal market of the Capital Market segment of the Exchange) per entity per stock
or
2. Rs.1,00,000 per entity per stock, whichever is lower, subject to a minimum penalty of Rs. 5,000/-
per entity per stock.
The applicable additional margin shall be based on slab-wise percentage breach of applicable position limits.
| 100% to less than 110% | 5% |
| 110% to less than 125% | 10% |
| 125% to less than 150% | 15% |
| 150% and above | 20% |
- The additional margin percentage shall be levied on (Value of underlying price x Position quantity in breach)
- Levy of additional margin shall be applicable from the first instance of violation in a calendar quarter.
- The additional margin applicable shall be blocked from the proprietary collateral of the Clearing member on T+1 day till the positions is below the applicable limits.
Instances’ as mentioned above shall refer to all instances of position limit violations in a calendar quarter. For the purpose of levy of penalties and additional margin, the number of instances of position limit violations across all underlying in a calendar quarter shall be considered.
When the open position of any Client/NRI/ FPI Category II (individuals, family offices and corporates)/scheme of MF, exceeds the position limit at the end of the day the same shall be treated as a violation.
In the event of violation, the following penalty would be charged to the clearing members for every day of violation:
1% of the value of the quantity in violation (i.e., excess quantity over the allowed quantity, valued at the closing price of the security in the normal market of the Capital Market segment of the Exchange) per client or
Rs.1,00,000 per client, whichever is lower, subject to a minimum penalty of Rs.5,000/- per violation / per client.
At the end of each day during which the ban on fresh positions is in force for any scrip, when any member or client has increased his existing positions or has created a new position in that scrip the client/ TMs are charged a penalty.
The penalty is recovered from the clearing member affiliated with such trading members/clients on a T+1 day basis along with pay-in. The amount of penalty is informed to the clearing member at the end of the day.
When the margin liability of a clearing member exceeds his effective deposit less minimum liquid networth or the margin liability of a trading member exceeds the margin limit specified by his clearing member, at any time, including during trading hours it shall be treated as a violation.