Basket Order - Funds vs Margin Needed

Product Feedback 🗣️
1

Hi @PravinJ ,

I would like to explain an issue related to the basket order by following examples.

Example 1

Let’s say, I’ve 10K cash and 5L as collateral margin in my account and want to place the following basket order (credit spread).

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Would I be able to place the order without any DPC Interest charges?

Example 2

Let’s say, I’ve 10K cash and 5L as collateral margin in my account and want to place the following basket order (debit spread).

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Would I be able to place the basket order without any DPC Interest charges?

Based on your answer, I can add further comments to explain the issue.

2

Hi @amit

Yes, the DPC will be applicable on, presuming the collateral has no cash equivalent.

We have written about this in more detail here - Important Update: On Margins, Usage of Broker Funds, and Interest Charges

Also, we have addressed your query related to DPC on Chat support as well today. Request if you initiate another chat or write us at help@dhan.co for specific query.

3

Hi @Dhan_Help ,

We have written about this in more detail here - Important Update: On Margins, Usage of Broker Funds, and Interest Charges

The post you shared doesn’t cover the example that I’m trying to explain.

Also, we have addressed your query related to DPC on Chat support as well today. Request if you initiate another chat or write us at help@dhan.co for specific query.

The query I had raised was related, but this has larger context which I couldn’t cover in the support chat.

Let me continue with the examples to complete my point.

Let’s say in above both of the examples collateral margin is from cash equivalent only. So, DPC won’t be initiated in either of the examples, is that what are you saying?

4

Hi @amit

If collateral is cash equivalent, DPC will not be applicable (unless there is MTM loss).

We recommend to have these queries clarified on regular Dhan Help channels, and feel free to share the final resolution on Community, if required.

5

After my telephonic discussion and email exchange with @Dhan_Help, finally I could bring @Dhan_Help to an agreement that Example 2 will result into DPC initiation irrespective of the MTM (loss/profit) of the trade.

To explain the same here,

Example 1

This will create a credit in the ledger by EOD and the next day opening balance will be positive (~56K). And, hence there is no question of DPC applicability.

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Example 2

This will create a debit in the ledger by EOD and the next day opening balance will be negative (~ -14K). And, so DPC will be applied.

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Since options contract MTM is not settled EOD daily in the ledger (like Futures contract), for options contract DPC shall only be applicable on a realised loss on closing of the trade.

Hi @PravinJ ,

Now, after explaining the whole theory with detailed examples, I’ve following Feedback for Improvement of DPC Implementation:

  1. In the example 2, DPC charges got applied because the application failed to calculate the fund requirements to place this trade. Fund Requirement and Margin Requirement is different, if you can understand in this example. DPC initiation could have been easily avoided, if the application nudges the trader while placing the trade with message that there is not sufficient cash balance to take the trade and if the trade is taken DPC will be applied from tomorrow.

  2. For any reason, if DPC is applied, the trader should be notified on daily bases over email and notification message, not at end of a week after DPC initiation.

I had to write this because I faced the same situation explained in example 2 and got to know about DPC only after a week after going through the ledger.

Hoping that my feedback will help you improve the product.

Thanks!

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