1. FAQ-s on Margin Funding and LAS #Strictly for internal circulation
Hedge Finance
FAQ-s on Margin Funding and LAS
#Strictly for internal circulation

2. What is Margin Funding?
Financing for investments in shares against the collaterals like Shares, cash, Warehouse Receipts, Mutual Fund Units, ETFs, etc.
If margin is assumed at 50%:
Client pays his margin in cash – if client purchases shares worth Rs. 100, he has to pay only Rs. 50, rest Rs. 50 will be paid by Hedge Finance
Client gives shares worth Rs. 50 as margin, he can buy Rs. 50 more worth of shares without paying any cash.

3. Margin in Cash Margin in Stock
Client Margin in Cash Rs.
(A)
Funding by Hedge Finance Rs.
(B)
Total Purchase Rs.
(A) + (B)
Value of Total Stocks as at end of day Rs.
End of day Ledger debit of Client Rs. 50
100
Client Margin in Stock Rs.
(A)
Funding by Hedge Finance Rs.
(B)
Total Purchase Rs.
Only (B)
Value of Total Stocks as at end of day Rs.
(A) + (B)
End of day Ledger debit of Client Rs. 50
100

4. What is the difference between Margin Funding and LAS?
Margin Funding is a financing done for investment purpose, whereas LAS is a kind of personal financing not for any direct investment activity. Initial margin in Margin funding could be either Securities or Cash whereas in LAS Initial Margin would be Securities.
Who is financing the funds on behalf of the client?
Financing of the funds is done by Hedge Finance Ltd and not by Hedge Equities Ltd
How is the interest calculated and charged?
Interest is calculated on a daily basis on the outstanding debit amount and is charged on every month

5. What are documents required to get the Margin Funding account opened?
Normal trading & DP account opening forms with all the necessary supporting
Hedge Finance Master Loan Agreement
Hedge Finance KYC Documents
DP Account with Hedge Equities is compulsory
Duly filled and signed Account opening form of Federal Bank Or IndusInd Bank Ltd
PoA in favor of Hedge Finance to operate DP and Bank accounts

6. What are the account opening charges incurred for availing the Margin Finance facility?
Normal charges for opening Trading & DP accounts
Charges incurred at cost for opening account with Hedge Finance viz. stamping charges, credit risk appraisal charges etc*

7. Can an account opened under Margin Funding can also trade in F&O?
Yes, an account opened under Margin Funding can also trade in F&O. But the funding is only applicable in Cash market – in F&O the client has to ensure full initial margin payment & MTM daily as per the rules of the Exchange.
How many days it takes to open the account?
On submitting the completed set of documents the account opening process takes around 5 – 7 working days

8. Why need to open a separate bank account for Margin Funding?
Why is the delay in opening a Margin Funding account as compared to Normal Trading Accounts?
Besides normal trading and DP accounts, a detailed credit risk appraisal of the client is done and also an account with Bank has to be opened – which may take more time from the bank
Why need to open a separate bank account for Margin Funding?
As per broking rules, the broker has to receive the money from the client’s bank account. Hedge Finance transfers the loan money to the new Bank account opened in client’s name and through the POA transfers the money to broker’s bank account.
Vice-versa in the case of payout where the broker transfers the money to bank account and through the bank account money gets transferred to Hedge Finance back.

9. Can a client avail both Margin Funding and LAS facilities simultaneously?
Yes, the amount required under LAS would be separately transferred to the client’s other Bank Account.
How the Margin Shortfall or MTM losses will be recovered from the client ?
MTM losses etc. can be accepted in form of cash and or approved securities
How many shares are approved for Margin Funding?
Presently we are offering Margin Funding on majority of the listed shares. However considering the risk involved Company may decline finance on any security.

10. Can normal cash accounts be converted to Margin Funding accounts & if yes, whether the client code will be changed and what are the required documentation ?
Yes, the normal cash accounts can be converted to Margin Funding accounts, the client code will not be changed
Customer can start availing the facility once formalities are completed and the account is activated with Hedge Finance

11. What is the minimum margin to be maintained and when margin calls would be made?
Client has to maintain a Margin of 40% at all the time. When the margin goes below 40% Hedge Finance would make margin calls and if the margin calls are not met securities would be sold to clear the shortfall.
Status at the time of availing the funding:
Client Margin Rs.
Funding by Hedge Finance Rs.
Total Purchase Rs.
Value of Total Stocks as at end of day Rs. 50
100
Status when Margin Calls are made:
Value of Total Stocks Rs.
Client Margin Rs.
Funding by Hedge Finance Rs.
Shortfall in Margin Rs. 90 40 50 10

12. Flow Chart on Account Opening – Margin Funding

13. Thank You