Upstox/RKSV Margin Facility
Upstox Margin facility is given to traders who fulfill the provided requirements as mandated by SEBI. The Margin Trading Facility offered by Upstox/RKSV is to assist traders leverage stronger positions.
Let us see how the Upstox/RKSV Margin facility works, with an example.
We have a particular stock, ABC who is showing an upwards trend.
Their shares are currently worth INR 50,000. However, all you have right now, with you, in hand, is INR 20000. On any other day, that position would have been given away. However, with the Upstox/RKSV Margin facility, you get a boost of INR 30000.
With INR 50,000 in hand, you will be able to buy the shares or in trade parlance leverage your position.
The Margin Trading Facility acts as a leverage for traders who then use it to amplify returns.
The pertinent question is why would anyone need a Margin Trading Facility?
To boost one’s trading capabilities. Opportunities will now be allowed to go.
Activating the Upstox/RKSV Margin trading facility doesn’t require much hard work. The process is fairly simple.
Also, for ease of usage, one can log on to the MTF from both the web and the mobile app.
The Upstox Margin facility gets activated within a minute after registration.
Point to remember is that Upstox offers up to a maximum of 50% of the trading value.
Hence if you have INR 50000 and the shares are worth INR 100000, then Upstox will fund the rest INR 50000.
However, one cannot be a part of intraday trading with the Upstox/RKSV Margin facility.
There is a rate of interest that is charged for using the Upstox Margin facility. It is INR 20 a day for sets of INR 50000.
One of the features of the rate of interest is that it is calculated on the basis of total amounts and not scrips. This helps the trader save a lot of money and build up his capital.
The Upstox/RKSV Margin facility does not have a limit on the number of scrips. However, they limit the total value at INR 10,00,000, since the maximum leverage that is provided through the MTF is INR 5,00,000.
A quick discussion on what a Margin is.
It is nothing but a provision offered by the broker, in this case, Upstox/RKSV, to increase the purchasing power of the trader. It is usually denoted by an “x”. So the margin of 2x would mean 2 times exposure or 50% margin.
And since Margin and Exposure are used interchangeably, Exposure is the measure of the potential loss, or in trade parlance, it is the amount (money and assets) invested in a particular sector.
Upstox/RKSV provides a margin for Equities, Currency Futures, Futures and Commodity (MCX). These are leverages for intraday trade. That is these leverages are applicable only for the same day. No positions are to be carried forward.
Leverages are provided on a position at the beginning of the trading day and are squared off at different times, depending on the kind of stocks.
- Equities and Future and Options: 3:15 pm
- Currency Futures: 4:45 pm
- MCX: 10:30 pm or 11:25 pm
The types of order which are prevalent in the Upstox/RKSV Margin:
- MIS: Margin Intra-Day
- CO: Cover Order
- BO: Bracket Order
- CNC: Cash and Carry
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Upstox Margin – Equity Exposure
The Upstox Margin for equity is divided into two parts:
Equity Delivery: 2.5x
Equity Intraday: Exposure Margin for Regular plan: 15x
Exposure Margin for Priority Plan: 20x
Exposure Margin for Regular Plan Cover Order: 4x
Exposure Margin for Priority Plan Cover Order: 25x
The Upstox/RKSV SPAN Margin calculator is a dependable tool that calculates the total margin required for a particular scrip.
The SPAN margin calculates the Value at risk while the exposure margin calculates the risk arising out of exposure of a particular scrip. The total margin, therefore, is the addition of the SPAN margin and the exposure margin.
Read Also: How To Open Upstox Demat Account – Charges, Document, Margin, Account Opening Process
Upstox/RKSV F&O Margin
Upstox Margin for Futures and Options are again divided into the Regular and the Priority plan:
Equity Future:
Exposure Margin for the Regular Plan: 4x
Exposure Margin for the Priority Plan: 4x
Exposure Margin for the Regular Plan Cover Order: 4x
Exposure Margin for the Priority Plan Cover Order: 6x
Equity Options:
Exposure Margin for the Regular Plan: 4x
Exposure Margin for the Priority Plan: 4x
Exposure Margin for the Regular Plan Cover Order: 4x
Exposure Margin for the Priority Plan Cover Order: 5x
A quick discussion regarding the Cover Order is necessary.
A Cover Order is a kind of a Market Order which has a Stop Loss attached to it. A Stop Loss is a mechanism gets triggered when a specified price is reached.
It is always advisable to have a stop loss in place; this is to minimize the chances of risk. As the name suggests, it is a way to stop a trader from making a Loss.
In the same vein, a Bracket Order is an intraday order which has a target and a stop-loss order. Through a bracket order, a trader is able to automate trade.
It can also be defined as an order which brackets an order to limit a loss and “lock in a profit”.
A Bracket Order usually has a higher leverage and is available in the majority of the segments.
Read Also: Zerodha Vs Upstox – Comparison | Which Discount Broker is Better For Traders & Investor
Upstox/RKSV Equity Future Margin
An Equity Future is a contract that allows the purchase or sale of an underlier which will have a fixed price on a date in the future.
The Upstox Margin for Equity Future is allowed to trade to up to 20% of the applicable. This will include the SPAN plus the Exposure margin. Also, the important point to remember is that the trader has to have 100% of the expected margin to carry the position forward.
The NSE Equity Margin calculator calculates the SPAN and the Exposure on the respective scrip.
The total required margin is then calculated taken into account the following:
- Upfront Margin
- Exposure Margin
- Value at Risk Margin or SPAN Margin
- Extreme Loss Margin or Exposure Margin
- The Net Premium
It is a handy tool that helps the trader in calculating the total amount required.
Upstox/RKSV Commodity Margin
Upstox/RKSV Commodity Margin is divided into two parts as per the plans offered by Upstox/RSKV.
The exposure margin for:
Regular plan: 2.5x
Priority Plan: 3x
Regular Plan for Cover Order: 3x
Priority Plan for Cover Order: 4x
The Upstox Margin is traded through the MCX.
The Upstox/RKSV Margin for Commodity Futures is up to 3x and that is for both buying and selling.
The leverage begins at the opening of the market only for new positions.
Point to remember is that the positions that are bought or sold on leverage will be squared off by default. This will happen 30 minutes before the closing of the market.
As per the timing of the MCX, the closing timing can be 10.30 pm or 11.25 pm.
Read Also: Upstox Vs Trade Smart Online Comparison: Demat, Brokerage, Margin
Upstox/RKSV Currency Margin
Currency trading is one of the largest modes of trading in the world, with almost 1.9 trillion dollars being traded in a day.
Established financial organizations trade in large volumes of currencies, buy and sell them to cater to international trade.
Upstox/RKSV allows regular traders to trade in the currency segment to help them take advantage of the fluctuations in the exchange rates, internationally.
The Upstox/RKSV Margin for currency is divided into the Futures and Options segment:
Currency Future:
Exposure Margin for the regular plan: 4x
Exposure Plan for the priority Plan: 4x
Exposure Plan for the Regular Plan Cover Order (CO): 4X
Exposure Plan for the Priority Plan Cover Order (CO): 5x
Currency Options:
Exposure Margin for the regular plan: 4x
Exposure Plan for the priority Plan: 3x
Exposure Plan for the Regular Plan Cover Order (CO): 4X
Exposure Plan for the Priority Plan Cover Order (CO): 5x
The Upstox/RKSV Margin calculator for Currency provides the total margin applicable concerning the selected currency.
Conclusion:
The Upstox Margin Review informs us about the current margin rates that can be offered if trading with Upstox/RKSV.
While trading can be a fulfilling experience, it also needs to be kept in mind that there are inherent risks involved. Hence it becomes imperative to take cognizance. Engaging a stop loss is one of the ways to minimize risks.
The margin that Upstox/RKSV provides is leverage. It is used to trade for larger positions. It should not be mistaken as the initial margin which is an upfront payment that the broker will collect.
This upfront payment is the combination of the SPAN margin and the Exposure margin. This is as per the regulations of SEBI.
One of the other reasons why Upstox/RKSV is a sought after brokerage firm is that it allows Margins against Shares. However, this only for those customers who have a Demat account and long term investments.
For Margin against Shares a haircut of 25% is applied while calculating the collateral margin of the holding.
In conclusion, Upstox/RKSV is one of the brokerage firms offering an easy to use and profitable margin policy. It can be a rewarding experience if properly used.
Upstox/RKSV Margin FAQs
Q1: Does Upstox/RKSV provide a Margin Trading Facility?
Upstox/RKSV does provide a Margin Trading Facility (MTF) to its customers. It is a fairly simple process. The Margin Trading Facility can be registered through the web or the mobile app and the acceptance arrives in seconds.
Upstox/RKSV, however, provides up to 50% of the trading value. Hence, though there is no limit to the number of shares one can buy, the total value of the shares should not be crossing INR 10,00,000.
That is because the maximum value Upstox/RKSV will provide as margin would be INR 5,00,000.
Q2: How much Upstox/RKSV charge to open a trading account?
Unlike other brokers, Upstox/RKSV does not charge a minimum initial amount while opening an account. A trader is allowed to transfer any amount of money to his/her account. That amount will be used as the margin for trading activity only.
However, an adequate amount should be kept in the account at all times. This is to enable the trader to trade at larger positions at all times.
Q3: Do all the financial products qualify for a margin?
No, Only those stocks which are in the cash segment and are in the approved list of the Stock Exchanges which abide by the regulations set by SEBI are eligible for a margin.
Q4: Does Upstox/RKSV provide exposure to the cash segment?
Any trader or investor who is using the broking service of Upstox/RKSV will be eligible for an exposure limit.
That limit will be a multiple of the amount, the trader is holding in his/her account.
This multiple is calculated by the Risk Management Team (RMS) of Upstox.
The prime factor which decides multiple is the prevailing condition of the market and the risks involved.
Q5: Does Upstox/RKSV provide margin on short-selling futures?
Yes, Upstox/RKSV provides up to 2x exposure towards short selling the following segments:
- Equity Derivatives
- Index
- Currency Futures Intraday
If a futures position has to be carried overnight or carried forward, the full exposure margin is required. The Stock Exchanges specify the margin rates daily. These rates are updated before the opening of the market.
