Margins allow investors to access more funds for trading than they own. This significantly increases their buying power. Although investors can increase their earnings using margins, there is also potential for significant losses. The daily margin statement is a report stockbrokers offer investors to give them details on their margin account. It also ensures compliance with margin requirements set by the SEBI, the exchanges, and the broker.
Margin requirements dictate the minimum amount that must be maintained in a margin account. This figure is based on the value of securities held and the leverage being utilised. If the investor fails to meet said requirements, they might be penalised, or their position can be forcefully liquidated.
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Stockbrokers are required by the Securities and Exchange Board of India (SEBI) to provide investors with a daily margin statement. It is done so that they are fully informed of their responsibilities and can prevent any forced liquidity or margin shortfall penalties. SEBI establishes guidelines and regulations regarding margin requirements, determining the minimum equity investors must maintain in their margin accounts.
These requirements are designed to protect the interests of investors, maintain market stability, and lower the risks associated with margin trading. The stockbrokers also release the statement to ensure transparency. The statement is sent out electronically through email and is password-protected. The investors' PAN card details are required to access it.
The report contains essential information, such as the investor's funds, the margin required for held positions, the margin available for taking new positions, etc. The statement is issued in a format prescribed by the SEBI and must contain the following information.
If an investor trades on multiple exchanges, then all the exchanges will be listed in the daily margin statement.
The daily margin statement is a document that helps investors understand relevant information regarding their margin account. It details the available margin and any obligations the investor might have to fulfil. The statement is essential for investors using margin as it helps them avoid any shortfall or liquidation of held assets.
It is also advantageous for keeping track of the used margins and margins available to a trader. These statements also help maintain transparency in the market between investors and brokers.
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