Important Announcements

21st Feb, 2025

SEBI vide its circular no. SEBI/HO/MIRSD/MIRSD-PoD1/P/CIR/2024/75 dated June 5, 2024 introduced pay out of securities directly to the client’s demat account.

This has reference to NCL circular NCL/CMPT/63669 dated 30-Aug-2024, NCL/CMPT/ 64925 dated 06-Nov-2024 and NCL/CMPT/66212 dated 20-Jan-2025 and other circulars issued in this regard from time to time for Direct pay out of securities to client demat account – Pilot launch on 25-Feb-2025

In addition to protection of client’s securities against any misuse , these new regulations now also simplifies the process of booking your MTF (Margin Trading Facility) trades.

Effective trade date February 24th, 2025, you will no longer be required to authenticate the MTF pledge requests via OTP; instead they will automatically be pledged and will be reflected under your holdings.

You are requested to take note of the following key points:

BTST is not allowed - Stock bought on 24th February 2025 cannot be sold on 25th February 2025.

1. Trades will be booked as MTF trades provided you are a Margin plus customer

2. If there is sufficient cash balance (ledger balance), shares will not be auto pledged and will be given as delivery. Consequently, in case of insufficient cash balance, your trades will be booked under MTF and will get auto-pledged.

3. Booking of your positions under MTF would be subject to broker, client and stock level limits as prescribed by the Exchange / Clearing Corporation.

4. All other terms and conditions with regards to MTF remain unchanged

For any further clarifications, kindly contact our Support Desk.

21st Feb, 2025

To mitigate the impact of bid-ask spread expansion and volatility disruptions on Stock Option premiums, we have implemented a restriction on market orders. Until further notice, only limit orders will be allowed for trading in Stock Options.

This measure is aimed at safeguarding your trades from sudden premium fluctuations and ensuring better price control. You can continue placing limit orders to execute trades at your desired price.

What is bid bid-ask spread expansion and volatility disruptions?

Bid-Ask Spread Expansion & Volatility Disruptions

1. Bid-Ask Spread Expansion:

The bid-ask spread is the difference between the highest price a buyer is willing to pay (bid) and the lowest price a seller is willing to accept (ask). Spread expansion occurs when this gap widens.

Why Does the Spread Expand?
1) Low Liquidity: Fewer participants in the market lead to wider spreads.
2) High Uncertainty: Events like economic announcements, geopolitical risks, or major earnings reports can cause market makers to increase spreads.
3) Market Stress: In extreme conditions, like flash crashes or crises, spreads widen as liquidity providers withdraw.

Impact:
1) Traders experience higher transaction costs as they have to buy higher and sell lower.
2) Execution becomes less efficient, especially for large orders.
3) Retail traders face slippage, where they get filled at worse prices than expected.

2. Volatility Disruptions:
Volatility refers to the magnitude of price fluctuations over time. A volatility disruption happens when sudden or extreme price movements distort normal market conditions.

Causes of Volatility Disruptions:

1) Macro Events: Inflation data, interest rate hikes, or geopolitical tensions.
2) Algorithmic Trading: High-frequency trading (HFT) strategies can amplify price swings.
3) Market Circuit Breakers: Temporary halts in trading due to extreme price moves.
Liquidity Shocks: Large orders consuming liquidity rapidly, creating price gaps.

Impact:
1) Erratic price movements can lead to panic selling or buying.
2) Margin calls & stop losses get triggered unexpectedly.
3) Wider spreads & illiquid markets make it hard to execute trades at desired levels.

Relation Between Both Concepts:
1) When volatility increases, market makers often widen spreads to compensate for risk.
2) Spread expansion further reduces liquidity, worsening volatility.
3) In extreme cases, both factors combined can cause flash crashes or price distortions.

18th Feb, 2025

On account of Chhatrapati Shivaji Maharaj Jayanti, 19th February 2025 will be a settlement holiday, impacting trade settlements and fund availability. Stocks bought on 18th February cannot be sold on 19th February, and margins or profits from trades executed on 18th February will not be available for use on the holiday. Additionally, fund payout requests made on 19th February will be processed on 20th February. Profits and credits received from equity trades or exiting positions in the derivatives segment on 18th and 19th February will be available for withdrawal on 20th February by EOD. Traders and investors should plan their transactions accordingly to avoid any disruptions. Please ensure that the stocks purchased on 18th February are not to be sold on 19th February to avoid the risk of short delivery and auction. Any losses or penalties incurred due to this will be the client’s responsibility.