Futures Trading

Is there any impact on the limit on execution of a buy/sale order?

If it is an execution of a fresh order (i.e. an order which would result into building up an open position), the margin blocked gets appropriately adjusted for the difference, if any, in the order price at which the margin was blocked and the execution price. Accordingly the limits are adjusted for differential margin. If it is an execution of a cover order (order which would result into square off of an existing open position), the following impact would be factored into the limits: a) Release of margin blocked on the open position so squared up. b) Effect of profit & loss on the square off of such a transaction. If an execution of an order resulting into building up spread position, impact on limits would be in terms of release of differential margin. For example, you are taking an open buy position for 250 shares in Future - ACC- 31 Aug 2023 @ 2500 and IM is 20%. Rs 125000/- would be blocked as an initial margin. Thereafter you take a sell position for 250 shares in Future - RELIND- 29 Sept 2023 @ 2600 and spread margin is 10%. Hence the execution of Future - RELIND- 29 Sept 2023 order is resulting into spread position. As explained above, margin required would be 250*2600*10% = 65000/- now. Hence the excess margin of Rs 60000/- (125000-65000) would be released and added into your trading limits. Continuing the above example, if you place an sell order for 250 shares in Future - RELIND- 31 Aug 2023 @ 2700, margin of Rs. 135000/- would be required to place this order. This margin would be required despite being a cover order to square off the open position in the same contract. Reason for the same is that the order now being placed by you would result into the increased risk exposure since the buy position of 250 shares in Futures - RELIND - 31 Aug 2023 has already been considered as position building up spread position. If buy position of 250 shares in Futures - RELIND - 31 Aug 2023 is squared off, sell position of 250 shares in Future - RELIND- 29 Sept 2023 @ 2600 would become non-spread position and subjected to margin at 20 % IM.