Reliance Money

TERMS AND CONDITIONS GOVERNING TRADING IN FUTURES AND OPTIONS THROUGH RELIANCE SECURITIES LIMITED

The following Terms and conditions are applicable for all transaction instructions, trades & open positions of the clients under the Futures & Options segment through Reliance Securities Limited (Reliance Securities)

Definitions:

In these terms and conditions, the following words and phrases shall have the meaning stated hereunder unless indicated otherwise:

American Style of options : An American style option is the one which can be exercised by the buyer at any time, till the expiry date, i.e. anytime between the day of purchase of the option contract and the day of the expiry of the contract.

Assignment : When a buyer/ holder of an option exercises his right to buy/ sell, an option seller is assigned by the Stock Exchange the obligation to honor the underlying contract, and this process is termed as Assignment.

'At-the-money': An option is said to be 'at-the-money', when the option's strike price is equal to the underlying price. This is true for both puts and calls.

Call Options : A call option gives the buyer, the right to buy a specified quantity of the underlying at the strike price on or before the expiry date in case of American options. The seller of the option, has the obligation to sell the underlying if the buyer of the call option decides to exercise his right to buy.

Calendar spread: "Calendar spread" means combination of risk offsetting positions in derivative contracts expiring on different dates for the same underlying.

Client’s account: Client’s account with Reliance Securities Limited

Expiry date: The date on which the option contract expires is known as Expiry Date. On Expiry date, either the option is exercised or it expires worthless.

Exercise Date: The date on which the option is actually exercised is called the Exercise Date.

European kind of option: The European kind of option can be exercised by the buyer only on the expiry day and not any time before that. In India, options on "Sensex" & “Nifty” are European style, whereas options on individual stocks are American kind.

In case of European Options the exercise date is same as the expiry date while in case of American Options, the options contract may be exercised any day between the purchase of the contract and its expiry date.

In the money: A call option is said to be 'in the money' when the strike price of the option is less than the underlying price. A put option is said to be 'in the money' when the strike price of the option is more than the underlying price.

Initial margin: Initial margin means the amount of upfront margin to be deposited by the Client with Reliance securities before placing an order in Futures or Options.

Trading limit: Trading limit means the trading limits (primarily arising from the funds deposited by the client) made available to the Client by Reliance securities.

Limit card: Limit card is the virtual card purchased/subscribed by the client from Reliance Money Limited from time to time that provides the customer turnover limit that can be carried out through reliancemoney.com within a given time period

M2M: M2M means Mark to market

Open Interest: The total number of Futures & options contracts outstanding in the market at any given point of time for a particular underlying.

Option Holder: Option Holder is the one who buys an option, which can be a call, or a put option. He enjoys the right to buy or sell respectively the underlying at the specified strike price on or before the specified time.

Option seller/ writer: Option seller/ writer is the one who is obligated to buy (in case of Put option) or to sell (in case of call option), the underlying in case the buyer of the option decides to exercise his right.

Option Premium: Option Premium is the price paid by the option buyer to the seller to acquire the right to buy or sell the underlying

Out-of-the-money: A call option is called out-of-the-money when the strike price is greater than the underlying price. A put option is called out-of-the-money when the strike price is lesser than the underlying price.

Put Option : A Put option gives the buyer, the right to sell a specified quantity of the underlying at the strike price on or before the expiry date in case of American options. The seller of the put option, has the obligation to buy the underlying at the strike price if the buyer decides to exercise his right to sell.

Strike Price or Exercise Price - The strike or exercise price of an option is the specified/ predetermined price of the underlying at which the same can be bought or sold, as the case may be, if the option buyer exercises his right to buy/ sell, as the case may be, on or before the expiry day.

Threshold%: Threshold% shall mean the mark to market % loss on a position upto which Reliance securities may not square off the open Futures & Options position after considering the available balance trading limits in the client‘s account

Underlying : Underlying is an index or a stock.

Website : Website refers to the website at the URL www.reliancemoney.com

Terms & Conditions pertaining specifically to trading in Futures:

The Client is permitted to buy as well as sell futures contracts based on Initial margins paid. In case of futures trading the Initial margin is the upfront margin blocked at the order stage which is usually between 10% to 40% of the trade value. This margin is to a large extent depend on the Exchange specified margin which is derived by the Exchange using SPAN. The objective of SPAN is to determine the largest loss that a portfolio might reasonably be expected to suffer from one day to the next day. SPAN® is a registered trademark of the Chicago Mercantile Exchange. The initial margin% specified by Reliance Securities shall include apart from the Exchange specified SPAN, exposure margin and additional margin, if any.

The Client agrees that in case of an order in Futures, initially, Margin shall be blocked at the applicable Margin requirement of the order value. For market orders, initially margin shall be blocked considering the last traded price of the contract. On execution of the order, the blocked margin amount shall be suitably adjusted as per the actual execution price of the order.

The risk monitoring team of Reliance Securities does online monitoring of the Futures positions and short fall of margins, if any, in client’s account. It shall act on alerts where due to mark to market losses or increase in margin the available margin on any open contract is eroded by more than the stipulated threshold%. In such scenario the system will check whether the client’s account has adequate funds/derivatives trading limits to cover the additional margin requirement (the difference between the Initial margin % calculated at the current market price and the available initial margin net off mark to market losses). If yes, then additional funds/trading limits are blocked from client’s account. If no, all or any of the pending order(s) could be cancelled or the open position(s) be squared off, at the discretion of Reliance Securities.

Also, as part of the End of day processes, each open position is marked to market with the Exchange settlement price and the net profit/loss is arrived at. If there is loss, the system will check whether the client’s account has funds/trading limits to cover the loss. If yes, the required funds/trading limits are blocked. If the cumulative loss on the open position is more than the threshold% and there are no free funds/trading limits available in the client’s account then the open position could be squared off on the next trading day at the description of Reliance Securities. If there is profit the same is released to the client’s account.

Margin requirement may be changed by Reliance Securities during the validity period of the contract and in such event the Client undertakes to make available additional funds/trading limits to continue with the open position. If such margin requirement is not met, the contract may come in M2M loop and may be squared off by Reliance Securities due to insufficient Margin.

The Client hereby undertakes to maintain sufficient Trading limit or to transfer funds, on his own, to make available required Margin against the open positions at all times in order to avoid square off by Reliance Securities due to insufficient Margin and also to safeguard the pending orders from getting cancelled.

Calendar Spread position: Calendar Spread position would attract Spread Initial Margin which is usually less than the margin applicable on two independent contracts. Spread benefit will be given to the extent of SPAN margin however exposure margin & additional margin if any, will be charged for each position independently. Reliance Securities shall in its sole discretion, determine the contracts which can form spread positions against each other.

Separation of Calendar spread Contract: In case of contracts which fall under Calendar Spread Position, four calendar days (or such other number of days as determined by Exchange/Reliance Securities from time to time) prior to the expiry of the near month contracts, the open position of the near month contract would be taken out of the Spread benefit and will be subjected to individual Initial Margin requirement. After Separation of the near month contract from the existing calendar spread position, margin requirement for the near month contract and other contracts will be re-calculated and trading limits would be blocked accordingly. If sufficient trading limits/funds are not available in client’s account then all or any of the open positions maybe squared off by Reliance Securities.

Reliance Securities shall not be liable for making a demand for Margin or otherwise inform the Client that the margins have been increased or the available Margin in the client’s has fallen below the required level and it shall be the responsibility of the Client to regularly monitor and review the margin requirement and the availability and furnish the additional margin to Reliance Securities.

The Client agrees that Reliance Securities shall have the discretion to select contracts that will be enabled for trading in Futures and the margin percentage for each scrip/underlying/contract. The margin may be taken in cash or in form of securities as may be acceptable to Reliance Securities.

As a risk containment measure, M2M losses shall be debited to the Client’s trading limits on a continuous basis where as benefit of M2M profits is not given.

On the contract expiry day, the Exchange would expire the position would be closed at the settlement price. Margin blocked on such expired position will be released and the trading limits would be appropriately increased after adjusting for realized profit/loss on close out.

Margin rates may vary depending on the Stock/contract/underlying as decided by Reliance Securities in its sole discretion. This margin requirement may be more than the margin prescribed by the Exchange.

On trade execution of the Futures contracts, the client’s limit card balance will get reduced by the contract value which is equal to quantity multiplied by the rate. On the expiry day if the Client has not squared off the open position during the day, the position will be marked as closed by the Exchange and limit to the extent of the value of the transaction deemed closed will be deducted from the limit card balance. Also, all applicable statutory charges will be levied

Terms & Conditions pertaining specifically to trading in Options:

Clients are permitted to buy Call and Put Option contracts as well as sell Put and Call Option contracts. In case of buy Call or Put only the option premium is collected.

In case of Short Options i.e. sell Put or sell Call Option, Reliance Securities charges Initial Margin. Initial margin is the upfront margin blocked at the order stage which is usually between 10% to 40% of the contract value. This margin is to a large extent depend on the Exchange specified margin which is derived by the Exchange using SPAN. The objective of SPAN is to determine the largest loss that a portfolio might reasonably be expected to suffer from one day to the next day. SPAN® is a registered trademark of the Chicago Mercantile Exchange. The margin% specified by Reliance Securities shall include apart from Exchange specified SPAN, exposure margin and additional margin, if any.

In-the-Money or Out-of-Money would be considered while calculating the Margin requirement on Sell option orders. In case of In-the-Money option orders, usually the margin requirement for the seller of the option would be high compared to the Out of money contract.

The Margin as computed above, if it is less than the Short Option Margin Percentage, if any, stipulated by the Exchange then the margin% charged will be that of the Short Option Margin Percentage.

Margin is also re-calculated at EOD and any difference in Margin is either blocked or released, as the case may be.

The Client agrees that Reliance Securities may depending on its own risk perception and without informing the Client, in its sole discretion, change the margin requirement any time.

In case of upward revision of the margin requirement either by the Exchange or Reliance Securities, the Client agrees to provide the required additional margin to continue with the open position. If the trading limit is not sufficient to meet the demand for additional Margin and if the shortage is to the extent of the threshold%, then Reliance Securities may close out all or any of the open positions at its discretion. However, before deciding to place the square off order(s) Reliance Securities may at its discretion cancel all or any of the pending orders.

Reliance Securities shall not be required to inform the client that the client’s margin available with it has fallen below the required level. It shall be the responsibility of the client to regularly monitor and review the margin availability and furnish the additional margin to Reliance Securities online through the website. Client accepts that Reliance Securities has the right to close out the open position at any time (without informing the client) in case the client does not satisfy the additional margin requirements.

Exercise: In case of an American option, the client can place an exercise request for the In the money Open buy position anytime except on the expiry date of the contract. The client may place exercise requests only in market lots prescribed by the Exchange. The exercise request can be placed only at the time slots specified by Reliance Securities when the exercise market is open. On the Expiry day, the exchange will automatically exercise all the In the money Buy position. In case of exercise request placed by the Client is accepted by the Exchange, the exercise position/quantity will be reduced from the open positions. If for any reason the exercise request is not accepted by the exchange, the exercise request is marked as rejected at the end of the day, and the open positions will be restored.

Assignment: In case the Client has an In the money option Sell position, the Contract could get assigned to the Client on any day by the Exchange, either partly or fully but in market lots. Upon assignment the difference between the strike price and settlement price will have to be paid by the Client and the same will be debited to the clients account. All assigned positions are reduced from the open positions of the client.

Margin requirement may be changed by the Exchange and/or Reliance Securities before the expiry of the contract. In such an event, the required additional Margin shall be re-calculated and If the trading limit is not sufficient to meet the demand for additional Margin and if the shortage is to the extent of the threshold%, then Reliance Securities may close out all or any of the open positions of the client at its discretion. However, before deciding to place the square off order(s) Reliance Securities may at its discretion cancel all or any of the pending orders.

The Client hereby undertakes to maintain sufficient trading limit or to transfer funds, on his own in the client’s account, to make available required Margin against the open positions at all times in order to avoid square off by Reliance Securities due to insufficient Margin and also to safeguard the pending orders from getting cancelled.

Calendar Spread position: Spread position would attract Spread Initial Margin which is usually less compared to the margin applicable on two independent contracts. Spread benefit will be given to the extent of SPAN margin however exposure margin & additional margin if any, will be charged for each position independently. Reliance Securities shall in its sole discretion, determine the contracts which can form spread positions against each other.

Separation of Calendar spread Contracts: In case of contracts which fall under Calendar Spread Position, four calendar days (or such other number of days as determined by Exchange/Reliance Securities from time to time) prior to the expiry of the near month contracts, the open position of the near month contract would be taken out of the Calendar Spread Position. After Separation of the near month contract from the existing calendar spread position, initial Margin requirement for the near month contract and other contracts will be re-calculated independently and trading limits would be blocked accordingly.

On the contract expiry day, the Exchange would expire the position would be closed at the settlement price. All the In the money contracts will get automatically assigned. Margin blocked on expired position will be released and the trading limits would be appropriately increased after adjusting for realized profit/loss on close out.

Option premium receivable may be made available to the client for further trading only on T+1 day.

The Client agrees that Reliance Securities shall have the discretion to select scrips/contract/underlying that will be enabled for trading in the Options.

On trade execution and on the assignment or exercise of the options contracts, the client’s limit card balance will get reduced by the contract value which is equal to quantity multiplied by the Strike price plus the premium, if any.

OTHER TERMS

Under no circumstances shall Reliance Securities be liable to the Client or any third party for any incidental, indirect, consequential, special or exemplary damages arising from or in relation to the Futures & options trading facility provided to the Client, even if Reliance Securities has been advised of the possibility of such damages, e.g. lost business, loss of revenue or loss of anticipated profits.

Reliance Securities shall not be liable for any failure to perform any of its obligations as a stock broker if the performance is prevented or delayed by a Force majeure event (as defined below) and in such an event its obligations shall be suspended for so long as the Force majeure event continues. Force majeure event means any event due to any cause beyond the reasonable control of Reliance Securities, including, without limitation, software malfunction, unavailability of any trading, communication system or computer systems, equipment or an accident, power failure, breakdown or interruption or any technical flaw in the website or communication lines or network lines or hardware or software, flood, sabotage, fire, explosion, civil commotion, strikes or industrial action of any kind, riots, acts of God, insurrection, war or actions of government.

If it is considered necessary for its own protection, Reliance Securities may require the client to immediately deposit cash margin or collateral into his account. If the client fails to provide the required additional cash margin or collateral, then the client hereby agree and acknowledge that Reliance Securities shall have the right to cancel any or all pending orders and/or square off all or any positions and sell all or any of the Futures/option contracts, shares, securities and other financial instruments in his account. Further Reliance Securities may exercise all or any of the above rights without making a demand for additional cash margin or collateral, or notice to the client for sale or purchase. The client hereby confirms that giving any prior demand or prior notice of canceling orders or squaring off open positions shall not be considered as a waiver of Reliance Securities right to cancel orders or square off open positions without any such demand or notice.

Reliance Securities reserves the right to either temporarily or permanently, withdraw or suspend the Futures & options trading facility provided to the client at any time without giving any prior notice or assigning any reason for the same.

The margin percentage for different scrips/contracts will be made available on the website. Portfolio based margins are levied for Futures & options positions. The margins detailed on the website are indicative numbers and the actual margins may vary as per Exchange communications and as per the risk perception of Reliance Securities.

For each underlying a threshold% for maximum M2M loss is predefined (currently 25% of the initial margin), which is permissible on outstanding Margin positions of the Clients. In case the M2M loss crosses the threshold% and in the absence of required free derivative trading limits in the Client's account either partly or fully, the open position may get squared off by Reliance Securities.

In case Reliance Securities cancel any pending order(s) and/or closes out any open position taken by the Client, then Client shall only be solely responsible for any losses arising out of the same.

Client accept and acknowledge that Reliance Securities would have the discretion to square off all or any of the open position of the client, (i) where the margin placed by the Client falls short of the margin requirement (ii) where the trading limits given to the client have been breached (iii) where the Mark to Market Loss on the open margin position has reached the stipulated threshold % of the margins placed with Reliance Securities for that particular position and the client has not taken the required steps to replenish the margin to the required level

The Client agrees that in case of insufficient trading limits in the client’s account, to safeguard its interest Reliance Securities may at its discretion block and /or debit securities lying in Client’s demat account linked to his trading account towards.

The Client agrees that Reliance Securities shall have the discretion to select the scrips/contract positions that will be squared off in case of shortage of margin or the orders that needs to be cancelled.

Reliance Securities may at any time without notice to the clients disable any of the scrips/underlying/contracts from trading. It may also without notice to the clients disable only buy in any of the scrips/contracts/underlying from trading or disable only sell in any of the scrips/contracts/underlying from trading

Reliance Securities shall have the right to modify these terms and conditions to meet any new regulatory requirements arising out of circulars, regulations, notifications etc issued by SEBI, Stock Exchanges etc., having any bearing on the Futures & options trading. Reliance Securities may also at is absolute discretion amend or supplement any of the terms and conditions mentioned herein at any time and that Reliance Securities will endeavor to give suitable notice of the same to the client either by email or by displaying the amended terms and conditions on the Website as it may deem fit, and such amended terms and conditions will thereupon apply to and binding on the Client for all his existing and new transactions in Futures & options.

By placing transaction instruction(s) in the Futures & Options segment through Reliance Securities, the client is deemed to have read and accepted all the above terms and conditions