SAMCO Securities is a brokerage firm known to provide the highest leverage in the industry. It offers a margin on all products in varying percentages. SAMCO equity margin is one of the margins offered & we’ll brief you about it today.
SAMCO is a company that has been facilitating stock market trades for almost three decades. It aims to simplify the trading process for beginners and help them get a stronghold on the concepts and basics.
After having served 3180+ cities and saving more than ₹561 Cr as brokerage charges, SAMCO is gaining loyal customers at a decent rate.
Let’s delve into the depths of SAMCO Equity Margin, shall we?
SAMCO Equity Leverage
Understanding something is more accessible when it is broken into small parts, right? So, we’ll appreciate Equity and Margin Trading as two different terms first and then learn about them in detail.
Equity is an individual’s claim to ownership in a particular private company. It is identified in the company’s balance sheets and is the shareholder’s stake in the company. For instance, Mr. XYZ is a 25% shareholder in ABC company.
Equity is commonly known as a unit of share.
Margin, also called leverage, is the name of debt in the stock markets. This debt gets used to buy financial assets with an expectation to make profits big enough that the after-tax earnings would be higher than the debt amount.
Together, these terms mean – margin taken to buy equity or shares in a particular company or multiple firms.
This facility is extended by all brokerage firms to increase their trading numbers and volume. SAMCO is no exception. The percentages and formulas to calculate the margin are different in each one of them.
SAMCO equity margin is one of the many margins, like derivatives and currency, offered by this broker.
There are two types of trading positions in the Stock market. They are Intraday and Positional/ Delivery. Let’s understand them briefly.
SAMCO Intraday Equity Margin
Let’s discuss Intraday trade first.
The intraday trading position lets you buy a financial asset when the market opens and sells it by the end of the same trading day. For easier understanding, it is also known as ‘Single Day Trading.’
Also, if you are into intraday trading and want to save yourself from the market fluctuation and loss. Know about SAMCO Bracket Order.
Since the position does not get forwarded to the next day, there is no overnight market risk. Thus, the margin duration is only a few hours; depository participants tend to extend a higher percentage as Intraday Margin.
When a trader selects MIS as a product while applying for the SAMCO equity margin, they get leverage between 3 to 15 times, depending on the stock’s liquidity.
Further, if the trader forgets to end the trade before the market closes, the intraday position is automatically squared off at 3:15 PM by the SAMCO RMS team.
2. Cover Order
The traders who wish not to get tied down because of the low leverage offered by MIS order they opt for the Cover Order or CO.
This product not only has higher leverage but also is a unique feature available to SAMCO traders. When a trader chooses CO as a product, it is mandatory to stop the trade loss.
For an easy understanding Cover Order meaning, it is an order with a stop loss. This order enables the broker to calculate the maximum risk on the positions. This calculation gets used to charge lower Intraday margins.
The formula used for this calculation is – [(Trade Price – Stop Loss Price) * Quantity].
Irrespective of what SAMCO equity margin product you choose, the trade will compulsorily be squared off at 3:15 PM by the RMS team.
SAMCO Equity Delivery Margin
The next trading position is Delivery Trading.
In delivery trading, when a trader buys a share, he holds it for a period indefinite. This trading period can vary from days to weeks or years altogether. They remain in his possession until he decides to sell them.
Just like the SAMCO Intraday Equity Margin, the delivery margin has two products. They are:
CNC (Cash & Carry)
As the product’s name suggests, the trader needs to pay the margin in its entirety for this trading position upfront, before executing the trade. So, for instance, you have ₹10,000 in your account, you’ll get permitted to buy delivery of the same amount only.
Further, while selling the CNC product, the stock should necessarily be a part of the SAMCO ecosystem, which means that the holding should either be in your SAMCO DP account or SAMCO Client Beneficiary Account.
Now, you might be wondering – why CNC requires a 100% margin upfront, right?
Let us answer it.
When a trade position requires carrying forward stocks, the price risk is increased by many folds. As observed, shares react to news and events worldwide, with 20% up or down movements. Thus, un-leveraged positions that do not require a 100% margin are preferred.
To your relief and benefit, you can convert an MIS trade into CNC and vice versa, whenever required.
BTPT (Buy Today, Pay in Two Days)
The rule for this product gets clear in the name itself. You can buy the stocks for the delivery trading position even if you don’t have the entire amount in your trading account.
You have to pay a required fraction of the margin, and for settling the rest amount, you get T+2 days. The most significant benefit of this option is you get to reflect that amount in your bank’s saving account statement and get savings interest accumulated in the annual savings account rate.
Holding this amount in your savings account can help you gain a good interest amount against it. So, the brokerage paid in the delivery transaction gets reduced.
A few charges get imposed on every executed trade, which is borne by the trader. These vary from brokerage charges to the securities transaction tax. These are either levied by brokers or government or regulatory bodies.
Since equity margin-based transactions also come under this, they get charged the same as mentioned above.
For every SAMCO equity delivery transaction, a nominal charge of ₹20 or 0.2%, whichever is lower, is levied on every executed order. But in the case of SAMCO equity intraday, the lower amount of ₹20 or 0.02% of the gross turnover is charged per completed order.
SAMCO is a well-known name in the brokerage industry. It is voguish for the low brokerage charges and for introducing the first trading league in India.
SAMCO equity margin stands out of the crowd due to the low margin charges. Even though you buy financial securities by availing the facility of margin, you wouldn’t want to give away the profits as margin charges.
SAMCO is not only offering Intraday and Delivery Margins for equity, but it is also extending product choices in either of the trading positions.
Trade with SAMCO Securities to grow your profits and reduce the varied charges levied.
Happy investing, folks!
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