Jainam's RMS Policy : Squaring off MTF positions

Square-Off Policy under Jainam’s Margin Trading Facility (MTF)

Jainam’s Margin Trading Facility (MTF) allows clients to trade using borrowed funds. To manage risk and maintain compliance, Jainam may square off (automatically close) open MTF positions under the following conditions:

1. When MTF position loss exceeds a substantial %:

If the loss on an MTF position reaches a substantial percentage, such as 80% or more, the position will be automatically squared off, even if there is sufficient balance in the client’s account. For example, if a stock is bought at ₹500 and its market price falls below ₹100 (an 80% drop), the position will be squared off. Jainam may, at its discretion, notify the client before squaring off.

2. When the Account is in Debit

 A margin call is issued if there is a margin shortfall or when the available MTF margin is less than the required margin for the total MTF positions. If the client fails to cover the margin shortfall within 5 days, the trade is converted into a CNC (Cash and Carry) or delivery trade, resulting in an ageing debit. If this debit is not cleared within the prescribed time, Jainam may square off positions proportionately to recover the outstanding amount. Jainam sends prior notifications before initiating a square-off.

3. Change in Stock Category

If a stock held under MTF is reclassified and removed from Group 1 securities by NSE or BSE, Jainam will notify the client and square off the position within 7 days of the reclassification.

4. Corporate Actions

For specific corporate actions such as mergers and buybacks, if the client informs Jainam in advance, the related MTF position will be squared off one day before the ex-date. However, this rule does not apply to corporate actions like bonuses, stock splits, dividends, and rights issues.