Safety & Security

Risk Management Policy

Risk Management Policy

Safety & Security
Dhan

The broking entity for the Dhan trading platform is Moneylicious Securities Pvt. Ltd. Moneylicious Securities Private Limited. (referred to from now on as MSPL ) CIN – U74999WB2012PTC184187 Moneylicious Securities is part of Raise Financial Services.

SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016. Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320 with Registered Office: Office No. 14D, 4th Floor, Shri Krishna Chambers, 78, Bentinck Street, Kolkata – 700001, West Bengal, India. Corporate Office: A-302, The Western Edge I, Off Western Express Highway, Borivali East, Mumbai – 400066, Maharashtra, India. Landline: 022-43116666.



Customers can place orders for Delivery, Intraday trades across segments i.e. Cash and Derivatives (Derivatives include FnO, Currency, Commodity) on Dhan. Dhan also allows Bracket Orders (BO) and Cover Orders (CO) as Intraday products.

In Cash Segment for Delivery or CNC trades, customers are required to have in their ledger balance funds upto the 100% of the gross value of stock at the time of the transaction. Currently no margin is provided for Delivery or CNC trades on Dhan.

In Cash Segment for Intraday trades, Dhan customers are provided a limit which is as per the exchange defined VAR+ELM for the respective scrips and subject to a minimum of 20%. For e.g.: customer A has effective ledger balance of Rs. 50,000 and wishes to buy a scrip X, assuming that the VAR+ ELM for the scrip X is 25%, customer can buy/sell scrip X only upto worth Rs. 2,00,000 for intraday.

In terms of Delivery / Carry forward Based derivative trades, the Dhan customer is provided a margin which is as per exchange defined margin that also is equal to Span + Exposure + Delivery + Special Margin. For Futures and Options traded on NSE/BSE/MCX, the limit provided to the customer is as per margin requirements for the respective contract. For Example, customer wishes to trade in 1 lot of Nifty, assuming the margin required to create position in 1 lot of Nifty is Rs. 1,50,000. The customer needs to have an effective ledger balance of at least Rs. 1,50,000 to initiate the trade.

In terms of derivatives contracts there are specific criteria which define the contracts that can be traded via Dhan for both normal and intraday trades in order to protect the consumers from market volatility and fluctuations.

The criteria for trading the areas are summarized below in Table 1.

Table 1: Derivative contract allowed for trading:

Sr. No. Exchange Segment Instrument CNC/ Carryforward Intraday
1. NSE FNO FUTIDX All contracts All contracts
2. NSE FNO OPTIDX All contracts Current month
3. NSE FNO FUTSTK All contracts Current month
4. NSE FNO OPTSTX All contracts Current month
5. COM MCX FUTCOM Current & next month Current & next month
6. COM MCX OPTFUT Current month Current month
7. NSE CUR FUTCUR First 3 month Current & next month
8. NSE CUR OPTCUR First 3 month Current month

Dhan also allows customers to place Bracket Order ( BO) and Cover Orders ( CO ) which are specific intraday products. BO is a type of order where customers can place three types of order simultaneously namely Initial Order, Stop Loss Order and Target Order. Limit provided for BO will be the Cash or Derivative limit stated above basis the product traded.

Note: In the BO, stop loss order and target price will be prefilled at 2.5% , the user can change it as per his requirement.

Covered order is a type of order where a customer needs to place stop Loss order compulsorily with initial order. Limit provided for CO will be based on the cash or derivative limit stated above basis the product traded. Note: In CO, stop loss order price will be prefilled at 2.5% , the user can change it as per requirement.

The product wise summary for trading limit that is available via Dhan is summarized below in Table 2.

Table 2: Summary of Dhan Product-wise limits:

Sr. No. Segment Intraday Bracket Order Cover Order
1. Cash Segment 5X* 5X* 5X*
2. FnO Derivatives As per exchange As per exchange As per exchange
3. Currency As per exchange As per exchange As per exchange
4. Commodity (Metal/Bulluion) As per exchange As per exchange As per exchange

List of Permissible Intraday Scrips.

Note: *Table 2 above - Maximum limit that can be provided for a scrip. The list of permissible intraday scrips at Dhan, specifies the scrip-wise margins.

The trading limit that is available to the customers is a function of their combined ledger which is available to customers across all segments along with the value of the pledged securities. Trading Limit = Total combined ledger (Net segment-wise ledger) + Pledge value (Net of Dhan Hair Cut).

Note: Valuation of margin pledge holding will be as per previous day closing price or current LTP whichever is lower after applying Dhan defined haircut.

In the cash segment, Illiquid stocks are those that cannot be sold easily due to limited trading volume. These stocks pose higher risk to investors because it is difficult to find buyers for them as compared to frequently traded shares. Stocks that are not liquid are restricted for purchase on Dhan. The stocks that are restricted on Dhan include GSM, ASM ( above stage 2) , unsolicited sms , stocks ( Refer Link for Detail ) as decided by the Risk Policy or updated basis exchange communication. Dhan reserves the right to refuse execution of any transaction requests of the customer on such restricted securities or to reduce the open market interests of the customer in such securities/ contracts

In terms of derivatives, Dhan has restricted trading in some options and future contracts to avoid manipulation of price and for the protection of consumers. The criteria for restriction is based on the open interest. In order for any derivative to be permissible, minimum open interest should be 10 lots in particular contracts and contract expiry should within the 9 months from current date.

Norms for Trading in Restricted script

In order to exercise additional due diligence some scripts are restricted at Dhan platform. Those scrips can be bought through a centralized call and trade desk with predefined norms.

Dhan shall not be responsible for non-execution/delay in execution of orders in restricted scripts consequential opportunity loss or financial loss to the customer.

Pre-condition:

  1. For buying in restricted script clients must have clear credit in account.
  2. Order will be executed after due diligence from the RMS side.
  3. Max order value will be 10% of the exchange volume of that script.
  4. Restricted script will be traded through Centralized call and trade desk.
  5. Restricted scripts purchased through the Centralized desk will not be allowed to sell the same day.
  6. Additional 1 % charges will be levy on purchase of Restricted script (on Purchase value).

Timer Base/intraday Square off :
At Dhan, a timer based intraday square off policy is followed where all positions created in Intraday/BO/CO will be squared-off from RMS side before closing of Market. All pending orders / unexecuted / partial orders will be cancelled as per intraday product feature. At the respective segments square off times, the positions will be squared-off at the best available price. The table below specifies the square-off time by each segment. Table 3: Timer based summary time

Segments Square off Time
NSE/BSE CASH, DERIVATIVES 3.20 PM
CURRENCY 4.45 PM
COMMODITY 11.15 PM for 11.30 PM, 11.30 PM for 11.55 PM Market closing

Near Circuit :

In the cash segment, fresh intraday positions shall not be allowed once the stock`s LTP reaches 90% of the defined circuit limit for the day. Additionally the RMS team reserves the right to square-off adverse open positions i.e. existing positions in loss wherein the stocks LTP reaches 90% of the defined circuit limit for the day, subject to best available price and quantity.


System Failure :

If due to reasons such as connectivity, link or system failure, i.e. circumstances beyond control, an intraday position is not squared-off then it will be treated as a carry forward position and RMS reserves the right to liquidate the same on next trading day as soon as markets open for the day, if required margin is not available.


Mark to Market square-off :

Dhan reserves the right to square-off all intraday positions ( cash as well as derivatives ) and carry forward derivatives trades, where-in MTM crosses 80% and above. The customers will be alerted by notifications at 60%, 70% on a best effort basis, however, given the market volatility, sending an alert should not be mis-construed as an obligation for Dhan. The position will be reduced on the best effort basis and the customer will be liable for any losses on square-off. All pending orders of the customer will be cancelled. If a customer is creating a buy position in options, then the full payment of the premium shall be blocked. In case of any MTM calculations or margin requirements, this option premium shall not be considered as a part of the calculation. Client needs to Maintain Coverage of 20% against buying in cash segment. If coverage goes below, RMS has the right to sell client holdings up to required coverage.


Ageing based square-off :

It is the customer's obligation to clear ledger debit balances in T+2 days ( i.e. on settlement day) where in T is the transaction/trading day. If there is a failure on part of the customer to clear the ledger debit then Dhan reserves the right to liquidate the stock upon ageing of the ledger debit beyond T+6 days. The stock will be sold from customers accounts on T+7 days for the ledger debit. For e.g.: All trades executed on Monday will be squared off on next Wednesday (T+7) where T indicates Trading day


Margin shortfall based square-off :

The customer needs to maintain the defined margin to retain position in derivatives segment ( FNO, Currency, Commodity ), RMS team reserves the right to initiate liquidation of position up to the required margin at any point of time. If the defined margin or exchange margin is short any open position can be squared-off at the Dhan discretion.


Note:

RMS liquidation will be done on T+1 basis for the Mark to Market (MTM) debit/margin shortfall. Even if due to sudden scrip volatility during the day, if a shortfall arises during the day due to MTM loss or margin increases, RMS liquidation will be done on the same day.

On T+1 day the required margin needs to be maintained before 9.30 AM in order to continue holding the position.

Dhan provides a limit as per Exchange norms only but Margin shortfall (End of day Margin or Peak Margin ) penalty can be imposed in case of sudden volatility in market and margin increase by exchange or Hedge broker by the clients.

Equity Derivatives :
In case of derivative contracts; starting from 3 days prior to expiry ( i.e. Monday, start of expiry week) , only intraday trading will be allowed and no fresh carry-forward position will be allowed. If the customer wishes to take or give physical settlement of derivative contracts, they would be required to maintain margin, which is to the tune of 100% of the contract value before 12.30 pm on expiry day (Thursday ). (Refer Link for Physical settlement of F&O ). If for any reason, in case there is a margin short-fall ( i.e. less than 100% of the contract value) , Dhan reserves the right to square-off the position. In case the position does not get squared-off for reasons such as liquidity constraints, option contract getting converted to ‘In The Money’ during market hours etc., the costs (penalties/losses) of physical delivery will be applicable to the customer.

Commodities :
Commodities with compulsory delivery will be closed a day before their respective tender period / delivery intention. Physical Delivery of Positions is not allowed. All the deliverable contracts of MCX enter ‘Tender Period positions’ as mentioned by exchange from time to time. Customer’s positions will be squared-off one day prior to the start of the ‘Tender Period’ of the contract. No positions will be allowed to carry over in Tender Periods. Please note, the creation of new positions in contracts will be blocked 1 day prior to the initiation of the ‘Tender Period’ or ‘Devolvement Period’

Commodity Delivery Options Blocking Before Devolvement Period :
Based on the criteria specified in the SEBI circular exchange shall identify option commodities which shall be settled through devolvement of future contract. Commodity delivery option contracts pertaining to devolvement will be blocked for further trading from T- 4 days before current month expiry day. (Only square off allowed for current month expiry options).

Payouts of Funds :
Customers can withdraw the amount available in the Dhan trading account at any point of time by placing a fund payout instruction of the trading platform. Calculation for fund withdrawable amount is given in table 4.

Table 4: Calculation of withdrawable funds:

Action Components Remarks
- Clear Fund Balance Effective Ledger Balance Across All Segments
Less Future Debit All Open Bills and other debit (if Any)x
Less Margin Shortfall Amount Total Margin Requirement - Total Collateral
Less Unposted Charges Unposted DPS/DP Bill/ Shortage Penalties etc

In case if the customer has traded at the time of the payout request, and wishes to take full payout then the system will release payout after deduction of 5% or Rs. 5000 (whichever is lower).

In order to execute and sell transactions of available securities in the customer's account, the customer can use E-DIS mode by using a TPIN from CDSL. This PIN is required to be set by the customer. Customers can pre-authorize the sale of stocks via the CDSL TPIN facility, at the beginning of the trading day so that customers do not need to take authorization prior to each sell transaction for holdings. Upto 80% of the sell credit of delivery trades can be utilised for all segments for further buying of new positions on the same day. For example: If the customer sells holding worth Rs. 200,000 then the customer will get credit for sell benefit up to 80% of gross sell shall be allowed, which will be Rs. 160,000 for new positions on the same day.

Single Order limit :


To avoid erroneous trading, below will be the single order level maximum cap applicable for any order.



Instrument Max Order Value Max Order Qty Max order Lot
CASH 2500000 999999 -
CURRENCY 9999000 - 500
FNO 9999000 - 99
COMMODITY 9999000 - 10

With reference to SEBI circular reference no: SEBI/HO/MIRSD/DOP/CIR/P/2020/143 dated July 29, 2020 & SEBI/HO/CFD/DCR-2/CIR/P/2020/164 dated September 02, 2020, all the Collateral margins can be given only in accordance with the securities pledge to Clearing Corporation (NCL). The request shall be initiated by the customer.

Unpledge of Shares
At the time of unpledge request, our systems will check that there will be no margin used or negative balance against pledge holdings. Accordingly, collateral benefit is removed on successful unpledge request and limit is reduced on real time basis.
When selling a pledged stock, unpledging will happen in real time and in line without the need of un pledging stocks by client before selling.
Pledge/ unpledge timing: up to 4 PM (Exchange working days )

An account shall be marked dormant if there's no trading activity observed for a period of 12 months. Dormant customer mark inactive at Dhan platform no further trade will allow.

On ledger debit, if debit obligation is not clear up to the settlement day, then Dhan will charge delayed payment charges at 0.05% per day. As per exchange norms, in order to trade in derivatives, the margin needs to be 50% cash/cash equivalent and only 50% non cash. Thus, any shortfall in Cash or Cash equivalent will levied Interest at the rate of 0.05% per day.

With respect to SEBI Circular SEBI/HO/MRD2_DCAP/CIR/2021/0598 dated 20th July 2021 for Segregation and Monitoring of Collateral at Client Level please note w.e.f. 02nd May 2022, Trading Members shall be required to maintain Cash and Non-Cash Collateral in the ratio of 50:50 client level segment-wise.

Starting May 2, 2022, you will have to maintain at least 50% of funds in cash compulsorily in your trading balance. This change is due to the SEBI mandate 8 which says that the client has to maintain at least 50% in cash margin to trade in all the segments.

For overnight positions, 50% of the margin needs to compulsorily come in cash or cash equivalent collateral (Exp- Liquid MF ETF, GSEC, SGB, etc) and the remaining 50% can be in terms of non-cash collateral margin( Pledged shares).

Delayed Payment Charges of 0.05 % per day will be levied if any cash margin shortfall on overnight position.

We highly recommend you to maintain 50% cash or cash equivalent in your trading balance, so as to avoid any delayed payment charges.

Below transaction require minimum 50% cash or cash equivalent:

Trading Activty Fund Requirement
Equity Delivery 50% cash/ cash Equivalent
Option Buy / Sell 50% cash/ cash Equivalent
Future Buy / Sell 50% cash/ cash Equivalent

Please refer to the example below for a better understanding:

Cash or Cash Equivalent = 125000/-
Non-Cash Collateral = 300000/-
Total Limit on Dhan = 425000/-
Margin used = 400000/-

For the above transaction to be processed, the client needs to have minimum cash or cash equivalent to be Rs.2,00,000/- ( 50% of Rs.4,00,000/-), but we can see that client only has Rs.1,25,000/- cash balance.

So in this scenario, clients will be charged an Interest on the remaining shortfall of Cash Margin ie: Rs.75,000 ( Minimum Cash Required (Rs.2,00,000/) minus Available cash (Rs.1,25,000/-))

Per day Interest charged will be: 0.05%

So the interest charged will be:

75,000 * 0.05% = Rs.37.5 per day

E.g.: Customer has a clear ledger Rs.50,000 and non-cash (pledge AHC) Rs. 100,000 and the customer takes a derivatives position that requires Rs. 150,000 margin. For this transaction the customer is required to have Rs. 75000 cash collateral but the customer had only Rs. 50,000 so interest will be charged on shortfall amount Rs.25,000.

Disclaimer

MSPL is currently not engaged in the business of customer funding. The limits or exposure to trade provided by MSPL to the Dhan customers is as per the regulations of exchanges and SEBI specified from time to time.

Investments in securities are subject to market risk. The Dhan ‘Account Opening Form’ provides an explanation of different types of risks the customers are likely to face in the market. While the risk of loss is inherent in the market, the ‘Dhan Risk Management Policy’ referred to as Risk Policy hereafter seeks to make the client aware of the risk controls and measures taken by Dhan to minimize potential losses. It is important for a customer to be aware of the Risk Policy and the way the policy would operate to regulate transactions. The Risk Policy adopts measures and precautions to contain risks to the minimum, however, the Risk Policy is not an insurance against losses. The Risk Policy is subject to change according to risk perceptions of the market and SEBI/Exchange regulations.

Risk policy is subject to change and modification depending on market scenarios , regulatory changes and Dhan discretion. New policy would be approved and uploaded on URL for reference whenever its changes.

Margin Trading Facility (MTF)-

The Margin Trading Facility would be available in accordance to the additional terms and conditions laid down below:
  1. Minimum margin requirement would be higher of requirement as defined by EXCHANGES, it would be as defined by DHAN RMS policy.
  2. Max 4-time limit will provided on base Margin - Exp – if client had Rs. 100000 margin he can avail exposure of Rs. 400000.
  3. Such margin would be in the form of CASH and/or non-cash collateral as per RMS Policy.
  4. An interest rate of 16% pa or 0.0438% per day will be charged on the funded amount via MTF.
  5. The Client understands that Margin Trading Facility would be extended only for the Stocks as determined by DHAN RMS policy from time to time.
  6. No client would be funded beyond Rs.25,00,000/- (Twenty Five Lakhs Only) which shall subject to RMS policy. Exposure to single stock shall be 20% of the funded amount.
  7. Margin Shortfall. In case of Margin Shortfall ,the shares will be squared-off 3 trading days after the shortfall has occurred.
  8. The Margin Trading position of the client shall always be marked to market on daily basis. Accordingly, at any point of time, if the holding coverage goes below 20% of the total portfolio, the client position to the extent of shortage.
  9. Marking Pledge -When client buy shares under Margin Trading Facility, he must pledge those shares to continue holding the position. This process must be completed by 9:00 pm on the same day. In case the client fails to do so, his shares will be squared-off on T+7 day as per Ageing Policy.