Here is what you need to know about cross margining.

Salient features of the cross margining available are as under:

Cross margining benefit is available across Cash and Derivatives segment

Cross margining benefit is available to all categories of market participants

For client/entities clearing through same clearing member in Cash and Derivatives segments, the clearing member is required to intimate client details through a file upload through Collateral Interface for Members (CIM) to avail the benefit of Cross margining

For client/entities clearing through different clearing member in Cash and Derivatives segments they are required to enter into necessary agreements for availing cross margining benefit.

For the client/entities who wish to avail cross margining benefit in respect of positions in Index Futures and Constituent Stock Futures only, the entity's clearing member in the Derivatives segment has to provide the details of the clients and not the copies of the agreements. The details to be provided by the clearing members in this regard are stipulated in the Format.

Cross margining is available across Cash and F&O segment and to all categories of market participants. The positions of clients in both the Cash and F&O segments to the extent they offset each other are being considered for the purpose of cross margining as per the following priority

Index futures and constituent stock futures in F&O segment

Index futures and constituent stock positions in Cash segment

Stock futures in F&O segment and stock positions in Cash segment

In order to extend the cross margin benefit as per (a) and (b) above, the basket of constituent stock futures/ stock positions should be a complete replica of the index futures. NSE Clearing specifies the number of units of the constituent stocks/ stock futures required in the basket to be considered as a complete replica of the index on the website of the exchange (www.nseindia.com/NSCCL/Notification) from time to time.

The number of units are changed only in case of change in share capital of the constituent stock due to corporate action or issue of additional share capital or change in the constituents of the index.

The positions in F&O segment for the stock futures and index futures should be in the same expiry month to be eligible for cross margining benefit.

The position in a security is considered only once for providing cross margining benefit. E.g. Positions in Stock Futures of security 'A' used to set-off against index futures positions will not be considered again if there is an off-setting positions in the security 'A' in Cash segment.

Positions in option contracts are not considered for cross margining benefit.

The computation of cross margining benefit is done at client level on an online real time basis and provided to the trading member / clearing member / custodian, as the case may be, who, in turn, shall pass on the benefit to the respective client.

For institutional investors the positions in Cash segment are considered only after confirmation by the custodian on T+1 basis and on confirmation by the clearing member in F&O segment.

The positions in the Cash and F&O segment are considered for cross margining only till time the margins are levied on such positions.

While reckoning the offsetting positions in the Cash segment, positions in respect of which margin benefit has been given on account of early pay-in of securities or funds are not considered.

The positions which are eligible for offset, are subject to spread margins. The spread margins are 25% of the applicable upfront margins on the offsetting positions or such other amount as specified by NSE Clearing from time to time.

The difference in the margins on the total portfolio and on the portfolio excluding off-setting positions considered for cross margining, less the spread margins is considered as cross margining benefit.