Hello Traders and Investors,
As the result declaration for General Election 2024 nears, the Indian stock market is likely to remain volatile for the next few days. The India VIX is currently at 24.20.
To prepare for this heightened volatility, we are implementing the following changes in our RMS Policy to safeguard our clients from the volatile movements of the market.
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Bracket Orders (BO) and Cover Orders (CO) products will be unavailable starting from June 3, 2024.
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The cash segment margin for intraday trading will increase from 20% to 25%, reducing leverage from 5x to 4x.
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MPP limit for options trading in NSE as per their price (Refer below table)
| Option Price Range | MPP Limit |
|---|---|
| Rs. 0.05 to Rs. 50 | 20% |
| Rs. 50 to Rs. 200 | 10% |
| Rs. 200 to Rs. 1000 | 5% |
| Rs. 1000 to Rs. 5000 | 2% |
What is the MPP Limit?
MPP stands for Market Price Protection. This feature helps safeguard market orders from being executed at unfavourable prices due to price slippage in an illiquid or volatile market.
For instance, if you place a BUY order using Market Price when the Last Traded Price (LTP) is ₹100, but sellers are only available at ₹150 due to poor liquidity, your order would execute at ₹150, resulting in a loss of ₹50. To protect against such losses, market orders in options are placed with protection.
With MPP in place, if you place a BUY order using Market Price, a 10% protection is automatically applied, converting your order into a Limit order at ₹110. If sellers are available at a price below ₹110, your order will execute. If not, it will remain open as a Limit order and expire at the end of the trading day.
Margin Trading Facility & Pledge on Dhan
We are making no changes to the Margin Trading Facility (MTF) and Pledge Benefits that are provided to our users in this period. The current experience will continue for this period.
Trade / Invest Responsibly in this time
Markets are expected to be very volatile during this period, we (as always) would continue to recommend our Traders & Investors on Dhan to trade responsibly and avoid taking unnecessary risks. For the benefit of our users, Dhan offers many Trader Controls on its platform to manage risk effectively in volatile markets. Over 45% of Traders on Dhan use these features regularly, if you haven’t explored we recommend you do so.
We hope markets will stabilise by the end of the week (7th June) and we should be able to revert to normal Risk Policy and measures; if any extensions we will keep you informed.
Thank you,
Kuldeep on behalf of Risk team