The stock market is a complex ecosystem. It offers a few asset classes that investors can browse and utilize their idle finances in stock trading to earn profits. All significant trading exchanges have the option of margin trading. It provides investors with additional capital.
Published on 13 January 2022
The Securities and Exchange Board of India (SEBI) laid down a regulation that requires all brokerage firms to send their investors a daily margin statement. It comprises several financial parameters and other data that help investors understand how much they can invest daily.
However, many investors don’t know what a daily margin statement is and how to interpret what it includes. Let us discuss it in detail to help investors, especially newbies, understand what they receive from their stockbroker every evening.
Investors can choose from a variety of categories and asset classes. An investor can either trade in the cash market or the derivatives market. The facility of margin investing is available on all major trading categories, giving traders the chance to use additional funds.
Also Read: How To Transfer Funds into your Trading Account?
Margin trading adds to the chances of earning profits or incurring losses. As most traders use margin and trade in different exchanges, it is difficult to keep a record of their funds.
Brokerage firms regularly send a report to the client. It increases accountability and helps consumers track their investments. This report is known as a daily margin statement.
Regardless of which exchange you trade at on any business day, the brokerage firm will send you a statement before the day ends. This daily margin statement includes values from all of the exchanges. So, if you only trade in NSE, you will receive a daily margin statement for NSE, comprising data from equity cash and equity derivatives segments.
The format for the margin statement is prescribed by the Securities and Exchange Board of India. A standardized format across stockbrokers ensures readability and consistency.
The meaning of the different terms in the statement is as follows:
The report informs the customer of the amount of margin that is no longer available for use. It gives an estimate of the account’s free margin that the client can use to open new positions without any penalty.