Tuesday, 1 May 2018

Details About Margin Funding, Dividend Income and Rolling Settlement In NSE Stock Market Trading

Margin Funding:

Margin Funding is defined as where traders get added margin on the stocks that trader is holding into trader’s Demat Account and trader can buy additional stocks with the help of such leverage. The difference between the future trading and margin funding is that in future the probability of loss is unlimited, whereas in margin funding, loss is limited to extent of the value of the shares available in the account. 

Never make the mistake of considering this is a safe option though its not a option that can give you unlimited loss, still it can wipe out your entire capital, if you are not skillful enough. Even in this strategy timely profit booking and stoploss is must. If the trader acquires the necessary skills it can be a great tool for profit.

Dividend Income:

There are many stocks in the stock/share market, which give awesome dividends year to year. These are not only providing growth to our capital, but also can be very helpful options to generate a regular income from it. 

There are many people, especially retired persons who wish to have capital growth plus dividend income on the savings they have accumulated over years. 

Such Persons can keep defensive but high dividend paying stocks in their portfolio. Traders first decide their goal, and then build a portfolio that will make the traders achieve their goal. Traders need to invest first time to acquire the necessary skills and they can go for investment of real money.

Rolling Settlement:

In a Rolling Statement, each trading is considered as a trading period and trades executed during the day are settled based on the net obligations for the day.

At NSE, trades in rolling settlement will be settled on the second (T+2) working day. 

For arriving at the rolling settlement day all prevailing holidays, which include bank holidays, NSE Holidays, Saturdays and Sundays are excluded. Classically, trades taking place on Monday are settled on Wednesday, Tuesday’s trades will be settled on Thursday and so on.
Now a days, Rolling settlement follows  a T+2 Settlement system, T means the same day, T+1 means next day, and T+2 means third day of the transaction.

Trading-à Rolling Settlement-à T
Clearing-à Custodial Confirmation and Delivery Generation-à T+1
Settlement-à Securities& Funds pay-in, Securities& Funds pay-out and Valuation Debt-à T+2

Post Settlement-à Auction-à T+3
----------------------à Bad Delivery Reportingà T+4
----------------------à Auction Settlement------à T+5

-----------------------à Rectified bad delivery pay-in and pay-out--à T+6
-----------------------àRe-bad Delivery Reporting and pickup--àT+8
------------------------àClose-out of re-bad delivery and funds pay-in and pay-out-à T+9

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