SEBI - New Rules for Peak Margin in Intraday Trading (Phase 2 Effective from 1, March, 2021)

Peak Margin is the minimum margin that MUST be collected by brokers from their clients in advance of placing any intraday / delivery order in the Cash and derivatives segment. This aims to curb the excessive leverage for intraday and derivatives positions. Clearing corporations will randomly take 4 snapshots at predefined time windows for arriving at such peak margin requirements on open positions during the day. Highest of the margin requirement from these 4 snapshots will be the Peak Margin. 

Daily peak margin obligation of the client will be compared with his/her margin available with the broker and the higher shortfall in collection of margin obligation shall be considered for levying of penalty as per the extant framework, as per SEBI's circular. 

Who is liable to pay the penalty on the peak margin shortfall? Broker is liable for both reporting the shortfall in collection of peak margin and pay penalty on such shortfall. The penalty is in range of 0.5% to 5% of the shortfall amount on a daily basis.

In the second phase of peak margin brokers need to collect 50% margin from their customers. In short, if a trader needs to take up a position of Rs 1 lac, he will need to deposit Rs 50 thousand as margin with his broker. Till last week, the trader had to deposit 25 percent of the trade value as margin.

From December 1, 2020, SEBI introduced the concept of peak margin reporting, in which stockbrokers have to calculate margins based on the intraday peak position, not just the end-of-the-day positions. To arrive at an intraday peak position margin, clearing corporations have to take at least four snapshots randomly during the day.

SEBI has now mandated all the brokers to report the margins multiple times during the day. This is to ensure that all leveraged trades are backed by sufficient margins.

The number of times the brokers need to send the margins in a day (at least four snapshots) is decided by the clearing corporation. The highest margin is the peak margin of the day.

This is part of the phased adoption over the next 6 months each and full adoption is expected to happen by September 1, 2021.

Phase 1 (Dec 2020-Feb 2021) – The client should have 25% of the peak margin available with the broker.

Phase 2 (Mar 2021-May 2021) – The client should have 50% of the peak margin available with the broker.

Phase 3 (Jun 2021-Aug 2021) – In the third phase, SEBI has said that the client should have 75% of the peak margin.

Phase 4 (Sep 2021 onwards) – By Sep 2021, clients should have 100% of the peak margin obligation available with the broker during the day.

SHOULD YOU INVEST IN NCDs

 

NCDs are Fixed Income Instruments for Assured Returns Non Convertible Debentures (NCDs) or Bonds are debt investments in which you lend money to a corporate or government entity that borrows the funds, for a specified period of time at a fixed interest rate.

NCDs are suitable for

·         Stable consistent return with least risk

·         Consistent periodic return rather than lump sum return

·         Low risk appetite

·         Diversification of portfolio with debt instrument

NCDs Benefits

·         Return is relatively higher in NCDs than a lot of other investment avenues.

·         No income tax is deductible at source as per the provisions of Sec 193 of the IT Act.

·         NCDs are listed and traded on the exchange, hence providing liquidity to the investor.

·         Agencies like CARE, FITCH, CRISIL, ICRA rate NCD's that are good indicator of quality of debt paper.

·         As NCDs are only in Demat online form, it is easier to handle and track.

Difference between NCD and Bond

NCDs are issued by public companies, whereas bonds are issued by government entities, large companies, and financial institutions to raise capital for the business purpose. Bonds are generally secured, whereas NCDs can be secured and unsecured.

What are Convertible and Non Convertible Debentures

Convertible debentures are those type of debentures that can be converted into equity shares of the company. Non-convertible debentures are those debentures that cannot be converted into equity shares of the company.

Type of NCDs

Secured NCDs: Secured NCDs are considered safer of the two kinds as their issues are backed by the assets of the company. In the event of the company failing to pay on time, then the investors can recover their dues by liquidating the company’s assets. However, the interest offered on NCDs is low.

Unsecured NCDs: Unsecured NCDs are much riskier than the secured NCDs as the assets of the company do not back these. Hence, when the company defaults on its payment, the investors have no choice but to wait until they receive payments as there are no assets of the company to recover their dues. However, the interest rate offered on unsecured NCDs is higher than that of secured NCDs.

Is NCDs interest Taxable

In short term (Less than 1 year) NCDs are taxed at your slab rate, which means if you are in the highest tax bracket, the interest you earn will be taxed at 30%.

In long term capital gain tax is 10%. NCDs can work for those in the lower tax category or those with no taxable income.

 

Don’t let high interest rates sway you, look at the risks

IIFL Finance to raise up to ₹1,000 crore through Public Issue of Unsecured Subordinated Redeemable NCD

IIFL Finance Limited (Formally known as IIFL Holding Limited)  will launch its  public issue of unsecured subordinated redeemable non-convertible debenture to raise up to Rs.1000 cr with a base issue size of Rs 100 cr and a green-shoe option to retain over subscription of up to Rs 900 cr, for the purpose of business growth and capital augmentation.

The bonds offer up to 10.03% yield for a tenor of 87 months and is thus provide an advantage against interest rate fluctuations in future. The issue has been rated AA by Crisil and AA+ by Brickwork.

Features of IIFL Finance NCD March, 2021 – Tranche I

Issue start date: 3-March-2021

Issue end date: 23-March-2021 (with an option of early closure)

It offers NCD bonds for 87 months tenure (7 years 3 months).

Coupon interest rates are between 9.6% to 10%. The yield is up to 10.03%.

These are unsecured Non Convertible Debentures.  

Face Value Rs.1000.

Minimum investment Rs.10000

These NCD bonds would be listed on NSE & BSE to provide liquidity to investors.

NRI’s cannot apply to this NCD subscription.

The allotment will be made on first come first served basis

The lead managers to the issue are Edelweiss Financial Services Limited, IIFL Securities Limited and Equirus Capital Private Limited.

NCD’s are available in the 3 series.  

·         Series-I would provide interest every year,

·         Series-II would provide monthly

·         Series-III would provide interest only on maturity.

Interest payable frequency are monthly, yearly and on maturity depending on the option chosen by the NCD investor.  

IIFL has a strong physical presence of 2500 branches across India and a well-diversified retail portfolio, IIFL Finance caters to the credit need of underserved population.IIFL Finance's loan assets under management stand at Rs 42,264 cr. The company's 90 per cent of the book is retail which is focused on small ticket loans.

IIFL Finance had a gross non-performing asset (NPA) ratio of 1.61% and a net NPA ratio of 0.77% and its total capital adequacy ratio stood at 21.4% at the end of December 2020. In Q3 FY21, IIFL Finance reported a profit after tax of ₹268 crore. up by 26 per cent from the year-ago period. The return on equity was 18.4 per cent.        

IIFL Finance stock was trading at Rs 277 on NSE, 26 Feb 2021 at 3:30pm, down 0.32 per cent from previous close.   

To free demat account click here: https://zerodha.com/?c=YR1785 

Live Public Issue (IPO) Invest wisely and double your money within a year or Sooner.

Initial Public Offer (IPO), is the first sale of shares by the privately owned company to the public. The companies going public raises funds through IPO for working capital, debt repayment, acquisitions, and a host of other uses.

The investor can apply for IPO Stocks by filling an IPO Application Form. These forms are usually available with stockbrokers for free. The investor can also apply for IPO Stocks online through kotak security, Angel Broking, Reliance Money and Zerodha etc. To open online account click at below link:

https://zerodha.com/?c=YR1785

Security Name	Start Date	End Date	Offer Price	Face Value	Type of Issue	Issue Status
Muthoot Fincorp Limited	18-02-2021	09-03-2021			Debt Issue	Live
RBL*	27-10-2020	26-04-2021	825.00	10.00	BuyBack	Live
HINDPETRO*	17-11-2020	14-05-2021	250.00	10.00	BuyBack	Live
SREEL*	04-12-2020	03-06-2021	160.00	10.00	BuyBack	Live
FRSHTRP*	10-02-2021	09-08-2021	90.00	10.00	BuyBack	Live
VRLLOG*	15-02-2021	14-08-2021	300.00	10.00	BuyBack	Live
ANUP*	24-02-2021	23-08-2021	800.00	10.00	BuyBack	Live
PATEL INTEGRATED LOGISTICS LTD	26-02-2021	12-03-2021	10.00	10.00	RI	Live
TATA STEEL LTD.	01-03-2021	15-03-2021	461.00	7.50	RI	Forthcoming
Authum Investment & Infrastructure Ltd	01-03-2021	15-03-2021	81.00	10.00	RI	Forthcoming
Satin Creditcare Network Ltd	03-03-2021	17-03-2021	30.00	5.00	RI	Forthcoming
REMI EDELSTAHL TUBULARS LIMITED	23-02-2021	01-03-2021	19.69	10.00	Delisting	Live
NEELAMALAI AGRO INDUSTRIES LTD	24-02-2021	09-03-2021	1600.00	10.00	Buyback - Tender Offer	Live
REMI ELEKTROTECHNIK LIMITED	01-03-2021	05-03-2021	11.52	10.00	Delisting	Forthcoming

HERANBA IPO

_{Heranba IPO subscribed 83.3 times on the last day}

_{The public issue received bids for 58,15,01,663 shares a against the total issue size of 69,81,417 shares. The retail investors portion of the share sale was subscribed 11.84 times, while that of non-institutional investors has been subscribed 271.15 times and qualified institutional buyers, whose alloted shares were subscribed 67.4 times at the close of the bidding process.}

The ₹625-crore initial public offering (IPO) of Heranba Industries was subscribed 83.3  times on the last day of bidding. The public issue received bids for 58.15 crore equity shares against an offer size of 69.81 lakh shares, according to the subscription data available on the exchanges. 

_{Objective of the Issue:}

• _{To meet business working capital requirements.}
• _{To meet general corporate purposes.} 
• _{To meet public issue expenses.}

_{Company Promoters:}

• Sadashiv K. Shetty                    
• Raghuram K. Shetty

Heranba is one of the leading domestic producers of pyrethroids with a 19.6 per cent market share. Pyrethroids accounted for 68 per cent of the company's revenues in FY20.

It is Incorporated in 1992, Heranba Industries Limited is a Gujarat-based crop protection chemical manufacturer. It is one of the leading domestic producers of synthetic pyrethroids like cypermethrin, deltamethrin, lambda-cyhalothrin, etc. The company manufactures different types of pesticides including insecticides, fungicides, herbicides, and other pest control products.