What is a Retention Statement?


As per Running Account Settlement regulations, Geojit can retain a certain percentage of a client's total margin requirement and the balance (if any) will be paid out to the client's registered bank account. 


SegmentRetention % (pledge + cash margin)If there is sufficient cash balance
Equity
100% of contract amount + 225% of (VaR + ELM)
* Up to 100% of contract amount will be retained as cash. 

* A minimum of 50% of VaR + ELM will be retained as cash (even if there is pledge margin)
F&O
225% of required margin (SPAN + Exposure margin)
A minimum of 50% of SPAN + Exposure margin will be retained as cash (even if there is pledge margin)



If margin requirements are retained, brokers are required to send a Retention Statement including details of the statutory pay-out to the client's registered email ID. 

Let us understand this better with an example.

Scenario A: The client has an open F&O position and only cash margins is his trading account.


ParticularsAmount
Cash Balance (before margin)
Rs. 6,00,000
Margin Requirement (for 3 lots of Nifty futures)
Rs. 2,50,000
2.25 Times the Margin
Rs. 5,62,500 (2.25  * Rs. 2,50,000)
Retention Amount
Rs. 5,62,500
Settlement Payout
Rs. 37,500 (Rs. 6,00,000 - Rs. 5,62,500)


Scenario B: The client has an open F&O position and both cash and pledge margins is his trading account.


ParticularsAmount
Cash balance (before margin)
Rs. 5,00,000
Pledge margin 
Rs. 20,00,000
Margin Requirement (for 3 lots of Nifty futures)
Rs. 6,00,000
2.25 Times the Margin
Rs. 13,50,000 (2.25 * Rs. 6,00,000)
50% of Margin
Rs. 3,00,000 (Rs. 6,00,000 * 50%)
Retention Amount
Rs. 3,00,000
Settlement Payout
Rs. 2,00,000 (Rs. 5,00,000 - Rs. 3,00,000)


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