Margin required for trading currency going up – July 9, 2013
Dear Traders,
Margin required for trading currency futures and options on NSE and MCX-SX would be increased because of the recent volatility in the currency derivative contracts. The increase in margins is presently applicable only for the USD/INR contracts and is applicable from July 11, 2013.
Trading Currencies @ Zerodha
To ensure that this increase in margin doesn’t affect our intraday currency traders, we will start giving intraday leverage on the USD/INR contracts from July 11, 2013. You will need only 50% of the revised overnight margins for trading using the product type as “CO” and this can be used to trade up to 30 minutes before the closing of the currency markets, at which point all “CO” positions are auto squared off.
*For more on cover orders (CO), read this blog
Please find below the content from SEBI circular.
Sub: Revised Position Limits for Exchange Traded Currency Derivatives
1. This is in partial modification of SEBI Circular No. SEBI/DNPD/Cir-38/2008 dated August 6, 2008, SEBI/DNPD/Cir-45/2009 dated March 24, 2009, CIR/DNPD/5/2010 dated July 30, 2010 and CIR/DNPD/2/2012 dated May 23, 2012 which, inter-alia, specified the position limits applicable for Client and Trading Member for Exchange Traded Currency Derivatives.
2. In consultation with RBI and in view of the recent turbulent phase of extreme volatility in USD-INR exchange rate, it has been decided to curtail position limits and increase margin requirements for Currency Derivatives as follows:
a. Margins: Initial and extreme loss margins shall be increased by 100% of the present rates for USD-INR contracts in Currency Derivatives.
b. Client level position limits: The gross open position of a client across all contracts shall not exceed 6% of the total open interest or 10 million USD, whichever is lower.
c. Non-bank Trading Member position limits: The gross open position of a Trading Member, who is not a bank, across all contracts shall not exceed 15% of the total open interest or 50 million USD whichever is lower.
3. Stock Exchanges are directed to:
a) take necessary steps to put in place systems for implementation of the circular, including necessary amendments to the relevant byelaws, rules and regulations;
b) implement provisions of this circular with effect from July 11, 2013;
c) bring the provisions of this circular to the notice of the trading members/clearing members and also disseminate the same on its website.
4. This circular is being issued in exercise of powers conferred under Section 11 (1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities market.
Happy trading,
In Currency USD/INR trading
If i have 5000 as Balance & i buy usd @65.1250 and sell @65.1750
Then how much profit i get?
USDINR Pair requires Margin Rs1290 for Sep(Normal) and Rs645 for Intraday. Means i just need 1290 for Sep USDINR Pair and 645 required for Intraday position
For Normal Margin, how much time i can hold the pair. Like in above ex, it shows Sept…so does it mean this contract will expire on last Thursday Sept ?
Can i trade for downtrend also. Like if i want to sell USDINR 64.18 (Normal CNC) for downtrend and exit position day after tomorrow suppose trading at 63.98 . Is it possible, as i think its F&O segment ????
Currency contracts expire two working days prior to the last business day of the expiry month at 12:30 pm. You can hold the contract till expiry, if you have sufficient margins in the account.
Yes, you can trade for any trend, you’ll only have to ensure you have NRML margins to available in your account at all times to carry forward the positions.
Hi Nitin,
i am new to trading , can i know how do i trade in commodity and currency ?
Suggest you to go through: http://zerodha.com/varsity/
hi Nithin
i want to trade in Currency future .
So can u have any blog or any documents through which i know about it.
Currently i am doing trade in equity future.
We currently don’t have any content on currency futures. We will have it soon here: http://zerodha.com/varsity/
Dear Sir,
I am planning to start usd inr intraday trading.
Pls let me know
1- how many lota does a beginner trade in a day
2- how many lota does a 6 month old daily trader traes in
How many lots to trade is based on how much capital you have allocated to trading. The best way to trade is by not taking more than 2 to 5% exposure of your capital on every trade. If you are starting off keep that % as low as possible, you can increase this with time.
Can we trade in currency exchange through Zerodha 6 days a week all 24 hours? How much minimum money required for this tool to trade to account opening?
Seema, currency exchanges in India are open only from 9am to 5pm, 5 days a week. SO you can trade only these times. You need to open a trading account paying Rs 200, and that’s it. Money required to trade currency is mentioned here: https://zerodha.com/margin-calculator/Currency/
Hello,
I have been trading in Equity F&O for quite a while and not moving to currency derivatives too.
Seems like in equity F&O, the quantity is always denoted in total (i.e. 1 lot is not written as 1, rather its written as 25 for Nifty).
However in case of currency USDINR, seems like only the lot numbers are given instead of total numbers, i.e. qty is written as 1 instead of 1000
Is this correct?
Yes correct. Go to currency tab on our brokerage calculator: https://zerodha.com/brokerage-calculator, you will see all details.
Hey Nithin, Thanks for the clarification.
I was under the impression that Nifty futures are the most traded instrument in the market however see the below observation as per the screen shot attached (of a sample data taken from Pi):
Nifty Futures –
OI (Total) – 13035275
OI (Lots) – 13035275/25 = 521411
Volume Traded Today (Total) – 12044650
Volume Traded Today (Lots) – 12044650/25 = 481786
INR USD Currency Futures –
OI (Lots/Total) – 1514850
Volume Traded Today (Lots/Total) – 1057340
By this comparison (in terms of lots), both OI & Volume traded of currency derivatives are much more than Index futures. Then why is Nifty futures referred to as the most traded instrument?
Thanks
Sukesh
Nifty options are the most traded instruments in the market. Contribute over 50% of trading volumes. USDINR is like a 60k contract, whereas Nifty is Rs 3lk contract. There are only 4 contracts in currency markets, whereas there are over 150 in the equity derivatives.
You can’t compare equity to currency. Globally currency markets are hundred times bigger than equity markets.
I want to start in currency future and currency options. I want to know how to start and some basic hedging strategy.
Thanks
From where will i get the margin details every day?
Check out this page. Our margin calculator page is the first of its kind in the world which gives you SPAN margins, intraday EQ margins, Commodity margins, all in one place. 🙂
If you’d like to do this the old-fashioned way, you can log into your back office going to http://bo.zerodha.com using Internet Explorer and checking the SPAN margin reports.
HI NITIN SIR HOW R U
WHY U R NOT GIVING 10 TIMES OF MARGIN IN CURRENCY FUTURE.BECAUSE LOSS POSSIBILITY IN CURRENCY IS LESS DUE TO MOVEMENT OF 20 TO 50 PAISE PER DAY I.E EOR 1 LOT, MAX LOSS WILL 300 OR 500 PER DAY
PLZ THINK ABOUT IT SERIUSLY AND TAKE A SOLUTION
Narayan,
When following a risk management system we have to go by the risk that can occur once in 100 days rather than based on daily average movements.
We are conservative in terms of leverage because usually it is this that can cause problems to brokerages in the longer term.
Leverage is like WMD(weapons of mass destruction) and usually is responsible to kill trader, brokerages and every possible business.
Cheers,
Hi Nitin/Zerodha,
Any plans in the immediate future to come with monthly brokerage plans for unlimited trading ??
We are not looking at anything on the pricing side, focus right now is on tools to keep you profitable.
Hey Zerodha,
You mean to say for intraday if i have Rs 2000 i can do an MIS trade ?? Entire 4000 is not reqd ??
Yes , Maahi . You can trade . 50 % of the over night margin required for intraday.
Thanks Basu for answering,
what is the margin required for writing out of money currency call. E.g writing 62c requires Rs 2000 earlier, now how much is required
anand,
The margin required would basically double for writing options and trading futures. If it was Rs 2000 earlier it will now be Rs 4000.
That said, we at Zerodha will start giving intraday leverage to all our currency traders if you are using the product type as MIS for USDINR contracts. You will be able to trade at 50% of the overnight margin, so the increase in margin won’t really affect you then. But if you are an overnight trader it will.