Position Square Off

At Navia Markets, the primary goal of our Risk Management System (RMS) is to safeguard the interests of both our clients and the firm. This often necessitates the square-off of open positions under certain conditions. Understanding and adhering to these policies can help you manage your trading activities more effectively.

Key Definitions:

  • Net Available Margin (NAM):
    NAM = Ledger Balance + Payin/Payout - Margin +/- MTM Gains/Losses +/- Booked Profit/Losses (across all open positions).

  • Mark-to-Market (MTM) %:
    MTM % = (Total of MTM gains/losses across all open positions + Booked profit/losses across all closed positions) / (Margins available at the start of position + any funds payin or payout).

Conditions Leading to Position Square-Off:

  1. MTM Loss Exceeds 40%:

    • The RMS system monitors margin utilization and MTM closely. If the MTM utilization exceeds 40%, Navia reserves the right to square off all positions (both intra-day and carry forward) at its discretion. In volatile market conditions, positions may be squared off even if MTM loss is at or above 10% without prior intimation.
  2. Negative NAM:

    • If a margin shortfall is detected at the start of the trading day, the RMS may square off positions to address the shortfall. This action is taken to ensure compliance with margin requirements.
  3. Intraday Square-Off:

    • All intraday positions (Cash and derivatives) will be automatically squared off anytime within 30 minutes of market closure. This includes all intraday products such as MIS, Cover Orders, Bracket Orders, and Stop Loss Orders. The RMS system first cancels any pending intraday orders before executing the square-off.
  4. Expiry Day Square-Off:

    • On the expiry day of contracts, high-value ITM, ATM, and CTM positions will be squared off starting at 2 p.m. Other positions will be squared off within 30 minutes of market closure.
  5. Margin Trade Funding (MTF):

    • If shares bought under MTF are not pledged by T+1 day, they will be squared off. Additionally, if required margins are not maintained, Navia may liquidate/sell funded or pledged shares.
  6. Collateral-Based Equity Trading:

    • If equity shares are purchased using collateral provided for derivative trading and are not funded, those shares will be squared off on T+1 day.
  7. Other Situations for Square-Off:

    • Navia may initiate square-offs without prior notice due to market volatility, SEBI debarment, or other regulatory obligations.

Important Notes:

  • Auto Square-Off Charges:
    Charges apply for each order squared off by the system. Clients are encouraged to manage their positions to avoid these charges.

  • Funds Clearing:
    It's advisable to use the payment gateway for clearing debit balances, as it updates in real-time.

  • Square-Off Intimations:
    Intimations before square-offs are provided as a precaution. Navia reserves the right to square off positions with or without prior notice based on market conditions.

  • Intraday Positions:
    Intraday square-off is a right, not an obligation. If not squared off, intraday positions will be carried forward and converted into a “Delivery Product” on the next trading day.

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