CONSOLIDATED POLICY ON RISK MANAGEMENT SYSTEM

It is for the information of all the clients/sub brokers/AP’s /employees of BgSE Financials Limited that a master policy on risk management is reproduced as below for the smooth functioning of the operational activities of the company.

1.      CAPITAL ADEQUACY DEPOSIT

A. Cash Segment:

1. Minimum BMC of Rs. 50,000 (in cash only) need to be kept with BFSL by Sub-broker for Each Exchange for Cash Segment.

2. Additional Capital is collected in the form of Cash/FDR/Bank Guarantee, but in ratio of 25:75.

3. For DBT member’s deposit of Rs.2 lacs in cash as minimum balance required for sub broker and in addition to that Rs. 1lacs per exchange is also required to be deposited.

4. Additional deposit where given can be in ration 25:75 where 25 % in cash and 75% in form of FDR’s and BG’s.

5. However shares are not accepted for “CM” segment.

6. BMC deposited with parent exchange cannot be transferred to BFSL.

B.  F & O Segment:

1. Minimum BMC of Rs. 1, 00,000 (cash only) need to be kept with BFSL by Authorised Person in F & O Segment.

2. Client need to maintain minimum capital of Rs.20,000/- (cash only)  in F&O segment.

3. Additional Capital is collected in the form of Cash/FDR/Bank guarantee

/Securities and should be in ratio of 50:50 only where 50 is cash/FDR/BG and 50 is securities.

2. TURNOVER LIMIT: No restriction on Turnover Limit.

3.   EXPOSURE LIMIT

A. Cash Segment:   

(1.) Gross Exposure allowed to the Sub-broker across his/her clients which will be  10-12 times of the capital adequacy deposit brought in by the Sub-broker/Client (in case of client specific arrangements) (Base Minimum Capital plus additional capital) depending upon market condition.

(2.)  Exposure is given at Sub-broker level.

(3.) Sub-brokers may fix exposure at their discretion to respective clients subject to total exposure given them.

(4) We are not collecting any margin in cash market as pay in of funds and securities itself is collected upto T+1 day.

B. F&O Segment:

(1.) The authorised person and clients will have to pay initial exposure margins, span margins and any other margin as specified by the relevant authority from time to time on real time basis. If at any point of time applicable margins in account of any applicant reaches 100% of limit allowed in F&O segments, system will not accept fresh orders from that users and terminal will be in squaring off mode. Under these circumstances AP/Client will have to square off his positions or deposits additional margins. Margins in F&O can be deposited in the shape of cash, FDR and approved securities and that deposit is to be made in prescribed ratio of cash and non cash components. At present it is 50:50 for AP/Clients i.e 50% cash and 50% non cash components. Here FDR/BG will be considered as cash equivalent for calculating the above said ratio.

(2.) Any M2M margin will be collected from AP’s/Client’s Bank A/c on T+1 day and company may call it on T day as well if the circumstances warrant for the same i.e in case of huge volatility.

4.  RELEASE OF MARGIN/CAPITAL ADEQUACY IN F&O AND CASH SEGMENT:

Free i.e unutilized margin available in cash of any sub broker/AP/Client with the company may be released only on request of respective subbroker/AP/Client on T+1 day if the amount is upto 5 lacs and on T+2 if the amount is more than 5 lacs. It can be released by the company itself on T day but in case of shortfall in Pay in only.FDR will be released upon receipts from respective exchange.

5.  SECURITIES PAY IN

A.   On ‘T ‘day:

1. Pay in obligations of shares of clients are lifted from ‘Client’s Bene A/c’ (if holdings are available for respective clients) NSE & BSE CM A/cs.

2. Further those clients, who have given POA, the shares are lifted from their respective DP beneficiary account maintained with BFSL DP.

3. For those clients who have given POA,  but, shares are not available in beneficiary A/c. BFSL uploads instruction for the  settlement obligation  for the respective clients ( the instruction status will be shown as ‘OVER DUE ‘ ), if  shares are available at any time  before  T+2 Pay in dead line, the above instruction will be settled.

4. The clients who have not given POA will transfer the shares from their DP account to company’s pool a/c or client Bene a/c themselves against their obligations.

B.  On T +1 day:

All the above ‘T’ day’s process continues.

6.     EARLY PAY IN OF SECURITIES

A.   On ‘ T ‘day:

The shares which are received in BFSL CM pool a/cs on ‘T’day, towards clients settlement obligations for NSE & BSE are uploaded to NSCCL and BOISL as early pay in.    

B.  On T +1 day :

The shares which are received in BFSL CM pool a/cs on ‘T+1’day, towards clients settlement obligations for NSE & BSE are uploaded to NSCCL and BOISL as early pay in.     

7.   FUNDS PAY IN  - CASH SEGMENT

For Cash Segment:

1. Each Sub-broker is treated as a particular ‘Branch’.

2. BFSL opens separate bank account for each  sub-broker (branch ) concerned , in the name and style of BgSE Financials Ltd (with Sb code) and account is operated by BFSL Officials Only.

3. The branch Bank A/cs are opened in Canara Bank or HDFC Bank or ING Vysya bank.

4. The client’s Pay in cheques are deposited in respective branch A/c.

On ‘T+1’ day

1.Exchange wise/ Settlement No.  wise * pay in obligation of a branch is collected  from the respective Bank (branch ) accounts on net basis.

2. BFSL sent debit advises to respective banks   towards Pay in obligation of  branches.  (Canara bank by- Soft copy, ING VYSYA bank- by Hard  copy of Pay in statement , HDFC bank, pay in is collected from  BFSL HO  through Online.

On T+2 days

Any shortfall of pay in obligation on T+1 Day from any branch  shall be collected on T+2 day.

8.   FUNDS PAY IN FOR F & O SEGMENT

F & O Segment:

(In F&O segment:  There are  of  2 categories)

1.       Those clients having bank account with any of the 3 designated banks (CANARA Bank/HDFC Bank/ ING VYSYA Bank).

2.       Clients who do not have bank account with any of the  designated banks  and such clients’ F&O Trading accounts are treated as  “F& O Running A/c)

On ‘ T’  Day:

F&O Bills are posted to clients’ F&O ledger a/c on a daily basis.

On T+1 Day:

A.   For those clients who have opened Bank account with CANARA Bank/HDFC Bank/ ING VYSYA Bank.:

1. Settlement pay-in amounts are collected from clients respective bank accounts.

2. Receipt entries are posted to clients F&O ledger a/c.

B.   For ‘F&O – Running Account’.

 1. BFSL is having CA-2911 with Canara Bank   for maintaining Settlement funds of those clients who have opted for ‘F&O Running Account’.

2. Clients need to maintain credit balance in their F&O Settlement Ledger accounts.

3. Daily F&O bills are posted to clients’ F&O Settlement Ledger account.

4. If Client’s F&O Settlement A/c is having debit balance:

(a)     The amount is transferred from F&O Capital /Credit balance if any available in Cash segment to F&O settlement A/c.

(b)    Further shortfall if any, Authorized person are informed to make arrangement to collect the funds from clients, immediately.

   (c)  Payment cheques received from     clients are deposited to CA-2911-‘F&O Running A/c’ by giving credit to respective clients F&O settlement ledger  A/c.

(d)   The sum total of all the clients debit balances for the bill date are transferred from CA-2911 to F&O settlement A/c of BFSL on a daily basis.

9. ACTIONS FOR DEFAULT IN PAY IN ACCOUNTS:

The pay in accounts must be collected from branch bank account of respective sub broker in cash segment and from clients/AP’s bank account in F&O segment on T+1 day. If there is any default in pay in amount, then warning will be given to make pay in immediately followed by suspension of trading in respective segment on all the terminals of sub brokers. Upon realization of pay in amount along with penalties only trading is restored. At second level where the debts outstanding cross a threshold of T+5 days the respective client’s account with debit balance for more than T+5 days id suspended for further buying. However in certain cases and on written request of Sub broker, company may allow buying where sufficient margin is there and sub broker has made the pay in at Branch Level but not beyond 25 days under any circumstances.

10. PAY OUT OF SECURITIES:

A. For those clients who have not opted for ‘Running Account’

1.On T+2 day pay out of securities are transferred to clients own beneficiary Id provided,  clients’  account do not have any debit balance.

2. For clients having debit balance, the shares are transferred to ‘Running A/c.’

B. For those clients who have opted for Running A/c.

On T+2 day, the shares are transferred to clients ‘Running A/c.’

C. Pay out of securities from ‘Running A/c”:

 (1) Based on Sub-broker Request.

The pay out requests received through Sub-brokers are processed on a daily basis and shares are transferred from ‘Running Account’ to client’s beneficiary account (of those clients who have cleared the debit balances).

(2) Transfer of shares from Running A/c to Client beneficiary account for those clients who are not opted for Running A/c. (those shares moved to Running A/c. due to debit balance on T+2 day).

Every Wednesday and Friday BFSL at its own transfers shares from ‘Running A/C’ to respective client’s beneficiary a/c.  (For those clients who have now been cleared the debit balances).

(3)    Quarterly settlement of  shares (Payout)

The shares which were kept in ‘Running A/c’  are transferred by BFSL to respective clients beneficiary account on last day of every calendar quarters, provided clients do not have any debit balance.

11. PAY OUT OF FUNDS TO BRANCH A/C. ( FOR CASH SEGMENT)

Cash segment: on t+2 day:

Settlement wise, payout of funds are transferred to respective branch accounts , provided, the particular branch is having pay out for the settlement on net basis.

12.  PAY OUT OF FUNDS : F & O SEGMENT:

A. For those clients who have opened Bank account with CANARA Bank/HDFC Bank/ ING VYSYA Bank.:

On T+1 Day:

1. Settlement pay-out amounts are transferred to client’s respective bank accounts.

2. Payment entries are posted to clients F&O ledger a/c.

Note: F&O Settlement ledger a/c becomes ‘Zero balance’ on T+1 day.  However, F&O Capital Ledger credit balance continues till Authorized Person gives request for the release but to be settled on quarterly/monthly basis as opted by clients.

B.   For ‘F&O – Running Account’.

1. Daily F&O bills are posted to clients’ F&O Settlement Ledger account on ‘T’ day.

On T+1 day:

The sum total of all the clients Credit balances for the bill date are transferred from F&O settlement A/c of BFSL to CA-2911 (Running A/c) on a daily basis.