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How does block funds facility work for Futures?
In Futures Trading, margin is required to enter and hold a position. The margin consists of:
Example:
Blocked Funds: 5,00,000
Trade Scenario: Nifty Futures Buy & Square Off
Instrument: Nifty Futures
Buy Price: ₹22,000
Lot Size: 75
Initial Margin Required (15% of Trade Value) = ₹22,000 × 75 × 15% = ₹2,47,500
Kindly note Mark-to-Market (MTM) Adjustments Done Daily
Day 1: Market Closes at ₹22,200 (Profit)
MTM Profit = (22,200 - 22,000) × 75 = ₹15,000
Debit:
- Margin of ₹2,47,500 will be debited from blocked funds by approximately 4:00 pm
- Applicable brokerage + Taxes will be debited by approximately 9:00 pm
Credit:
- Profit of ₹15,000 will be credited on next working day.
Day 2: Market Closes at ₹21,900 (Loss)
MTM Loss = (22,200 – 21,900) × 75 = ₹22,500
Debit:
- Loss of ₹22,500 will be debited from the blocked funds by approximately 4:00 pm. If insufficient funds, the broker may issue a margin call.
Day 3: Squaring Off at ₹22,500
Profit Calculation = (22,500- 21,900) × 75 = ₹45,000
Credit:
- Margin of ₹2,47,500 + Profit of ₹45,000 = ₹2,92,500 will be credited to the bank account on T+1 day (T being the date of square off)
- Applicable brokerage + Taxes will be adjusted from the above amount.
- Initial Margin (SPAN + Exposure Margin) – Required to initiate a trade.
- Mark-to-Market (MTM) Margin – Adjusted daily based on price movements.
Example:
Blocked Funds: 5,00,000
Trade Scenario: Nifty Futures Buy & Square Off
Instrument: Nifty Futures
Buy Price: ₹22,000
Lot Size: 75
Initial Margin Required (15% of Trade Value) = ₹22,000 × 75 × 15% = ₹2,47,500
Kindly note Mark-to-Market (MTM) Adjustments Done Daily
Day 1: Market Closes at ₹22,200 (Profit)
MTM Profit = (22,200 - 22,000) × 75 = ₹15,000
Debit:
- Margin of ₹2,47,500 will be debited from blocked funds by approximately 4:00 pm
- Applicable brokerage + Taxes will be debited by approximately 9:00 pm
Credit:
- Profit of ₹15,000 will be credited on next working day.
Day 2: Market Closes at ₹21,900 (Loss)
MTM Loss = (22,200 – 21,900) × 75 = ₹22,500
Debit:
- Loss of ₹22,500 will be debited from the blocked funds by approximately 4:00 pm. If insufficient funds, the broker may issue a margin call.
Day 3: Squaring Off at ₹22,500
Profit Calculation = (22,500- 21,900) × 75 = ₹45,000
Credit:
- Margin of ₹2,47,500 + Profit of ₹45,000 = ₹2,92,500 will be credited to the bank account on T+1 day (T being the date of square off)
- Applicable brokerage + Taxes will be adjusted from the above amount.
Last updated: 3 Months Ago
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