InvestorQ : I have commodity acct no of times broker square off posn on reaching loss near 80%. one day loss reach 200% he square off posn and asking money from me.
Virendra Singh made post

I have commodity acct no of times broker square off posn on reaching loss near 80%. one day loss reach 200% he square off posn and asking money from me.

Answer
user profile image
Purvesh answered.
1 year ago


You must be aware that trading is by default a risky activity and the broker only executes the transactions on your behalf. So, when there are any losses or profits on the trading account, they belong to you. Most brokers have their risk management system where the customer is requested to bring in additional margins where there are losses on the account.

If the funds are not brought in on time then the broker really has no choice but to square off your positions. At the end of the day, it is the broker who is responsible to the exchange for the clearing and settlement and SEBI rules also requires that brokers cannot leave losses in the client account and they have to be recovered.

Ideally, these things are clearly laid out in the trading agreement that you sign with the broker and I suggest you read them thoroughly once again. In case, there are any doubts you have, talk to your broker and get clarity. But squaring positions where there is no margin in the account is standard practice.