What are Peak Margins?
Peak Margin is the minimum margin to be maintained by a client with a broker (Geojit) for any new or open trade. It requires a minimum of 20% of the order value for any new or open position to be maintained in your trading account. It can be maintained as cash or pledged securities, and any shortfall will attract a penalty.
As part of peak margin reporting, the Clearing Corporations take a record of client-wise open positions with a broker 4 times during a trading day. This is done to determine requirements and ensure that sufficient margins are maintained. The highest amount of margins utilised (based on open positions) from these 4 snapshots is taken as the peak margin requirement for the day. Hence, the margins to be maintained in your trading account are calculated based on the maximum value of positions taken during the day.
For example, Mr Vipin buy shares for Rs. 1 lakh over several orders in a day.
Assuming that peak margin checks are done at the given times, the margin requirement for his open positions during the day are as follows:
| Peak Margin Snapshot Time | Peak Margin Requirement |
|---|---|
| 10:00 a.m. | Rs. 25,000 |
| 11:00 a.m. | Rs. 30,000 |
| 12:30 p.m. | Rs. 5,000 |
| 1:30 p.m. | Rs. 15,000 |
When the broker reports client-wise margins to the exchanges at the end of the trading day, Mr Vipin must have a minimum of Rs. 30,000 (highest requirement during the day) as margins in his trading account to avoid penalties.
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