Daily Margin

Daily Margin

What is Daily Margin ?

Daily Margin can be defined as the amount a stock exchange member is mandatorily required to deposit on a daily basis for the purpose of purchasing or selling securities. The amount is determined by none other than the stock exchange itself.

The primary objective behind regulating a daily margin is to curb excessive speculation.

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While imposing daily margins, a stock exchange generally categorizes its members into two separate divisions: Type I and Type II.

All Type-I members are required paying the daily margin on their trades in ‘A’ group scripts (both for carry forward and delivery) at 10 per cent rate. The Exchange usually collects a daily margin from its Type-I members for their transaction in the B1 and B2 group scripts. Meanwhile, as for Type-II members, daily margins are collected on the basis of transactions carried out in A, B1 and B2 group scripts (it primarily depends on the outstanding positions in the market).

Edited and Updated 01st February 2014

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