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THE initial margin is payable upfront by clearing members. Initial margins can be paid by members in the form of Cash, Bank Guarantee, Fixed Deposit Receipts and approved securities.

Non-fulfilment of either the whole or part of the margin obligations will be treated as a violation of the rules, bylaws and regulations of NSCCL and will attract penal charges at 0.09 per cent per day of the amount not paid throughout the period of non-payment.

In addition, NSCCL may at its discretion and without any further notice to the clearing member, initiate other disciplinary action, including withdrawal of trading facilities and/or clearing facility closing out of outstanding positions, imposing penalties, collecting appropriate deposits, invoking bank guarantees/ fixed deposit receipts, etc.

Margin in the form of cash is made available by making the required amount in the respective clearing bank account and sending an authorisation letter to NSCCL for debiting the said amount.

FDRs

Fixed deposit receipts should be issued by any of the branches situated in cities of: Mumbai, New Delhi, Chennai, Calcutta, Ahmedabad and Hyderabad of the approved banks. The FDR should be issued either in the favour of: "HDFC Bank Ltd. / Stock Holding Corporation of India Ltd. (as the case may be) - A/c Clearing member name" or "NSCCL - A/c Clearing member name" as the case may be and should be deposited with HDFC Bank Ltd. or SHCIL or NSCCL.

Bank Guarantees

Bank guarantees as margins must be in the prescribed format and from approved banks. In case the bank guarantee is without a claim period (prescribed format), the maturity period of the bank guarantee would be reduced by three working days, which would be considered as claim period by Clearing Corporation.

While filling the details in a Bank Guarantee, it should be ensured that:

* No relevant portion is left blank

* All handwritten corrections and blanks are attested by the bank by affixing the bank seal/stamp along with the signature of at least one authorised signatory.

* All irrelevant portions struck off on the printed format should also be authenticated by the bank by affixing the bank seal/stamp along with the signature of at least one authorised signatory.

* Each page of the bank guarantee should bear the bank guarantee number and should be signed by at least one authorised signatory of the bank.

* The clearing member should also ensure that the bank guarantee is free from any discrepancy before the same is submitted to NSCCL.

Secutities

Equity shares of approved companies, in electronic form (demat securities) in the designated depository accounts maintained by the Custodians (HDFC Bank Ltd. / Stock Holding Corporation of India Ltd. (SHCIL)) can be submitted towards margin deposits. These securities are required to be pledged in favour of National Securities Clearing Corporation Ltd. The securities would be subject to a minimum margin of 15 per cent on Nifty securities, and a minimum margin of 30 per cent margin on other securities or such other margin percentage as may be decided by NSCCL from time to time.

Ownership of Securities

The securities deposited, would be subject to the legal and beneficial ownership of the clearing member/ spouse, any of the partners/ their spouses or any of the directors, in case of individual, partnership or corporate clearing members respectively, as the sole/ first joint holder, provided no depositor of securities is a minor as on the date of deposit thereof.

Securities not approved for acceptance. The following securities are not accepted by NSCCL:

a) Partly paid securities b) Securities subject to any lock in period, buy back scheme, any charge or lien, encumbrance of any kind, or such other limitations or title is questioned before the court or any regulatory body.

Edited extracts from NSE Web site.

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