SEBI in their circular has mandated compulsory delivery of F&O position open on expiry of these 46 stocks for July expiry .
So what does it mean?
Currently, traders leave their F&O position open on expiry for cash settlement. Wherein, either the profit is credited to their account OR the loss in debited from their account.
Going forward, if traders leave their F&O position open on expiry of these 46 stocks for July expiry then they will be physically settled (delivered).
So what the implications are of physically settled/delivered?
- Pay-In of Funds: The trader needs to make the funds available to the extent of contract value if he/she is long on (futures/calls) or short on put.
- Delivery of Stock: The trader needs to deliver the shares to the extent of contract value if he/she is Short on (futures/calls) or Long on put.
In consideration with this change, most of the stockbrokers are squaring off such open position 2 to 4 days prior to expiry. If the broker is unable to square off the position before expiry, for whatsoever reason, the trader will be liable to make funds/securities available in your account to the extent of the settlement value/securities.
So what’s the solution to this?
Traders, in order to continue their position on the script, can Rollover their position from one contract to another.