Version 1.

DotEx International Limited

‘Exchange Plaza’, C-1, Block G,
Bandra Kurla Complex, Bandra (East),
Mumbai – 51, Maharashtra.
E-mail support – now@nse.co.in
Website – www.nowonline.in
Contact number – 1800 22 00 52 (Toll free)
 Table of content

1. Introduction ................................................................................................3

2. Order quantity ............................................................................................3

3. Order value ................................................................................................3

4. Gross exposure..........................................................................................3

5. Check CAC amount used...........................................................................4

6. Check holdings...........................................................................................4

7. Span margin order level .............................................................................4

8. Consider Realised Profit and Loss .............................................................4

9. Consider unrealized loss ............................................................................4

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Copyright

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express prior written consent.

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1. Introduction
Risk Management System (RMS) is a very critical offering of NOW. It’s very
important that the person handling the RMS has a proper understanding of the
risk management module of NOW.
Now has got a rule based RMS module. These rules work in combination with
few pre-defined product such as,
• MIS: Margin Intraday square off
• CNC: Cash and carry
• NRML: Normal
The behavior of these products is purely dependent on the set of rules that are
selected in the risk template which is known as the category. A typical category
should consist of the following rules.

2. Order quantity
This rule ensures that at any given point in time a single order of more than the
specified quantity is restricted. This rule is applicable for all three product and
both the segments (Cash and derivatives).

3. Order value
This rule ensures that at any given point in time, a single order of more than the
specified value is restricted. This rule is applicable for all three product and both
the segments (cash and derivatives).

4. Gross exposure
This rule is meant for MIS and NRML products and is applicable only for the cash
segment. At the time of the category creation you should specify the Exposure
Multiplier along with this rule. The Exposure Multiplier is the number of times the
client can create exposure in the cash segment against the limit that is available.
For determining the gross exposure the exposure are netted off on the same
scrip and is added up across the scrip.
E.g. the risk manager has selected the rule of Gross exposure and has specified
the Exposure Multiplier of 5 and assigned this category to a client.
The client does the following transactions:
Symbol Buy/ Qty Price Value Gross Margin
Sell Exposure Blocked
Reliance – EQ Buy 10 2300 23000 23000 4600
Infosys – EQ Sell 5 1935 9675 32675 6535

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 Reliance – EQ Sell 5 2305 11525 21150 4230

5. Check CAC amount used

This rule is meant specifically for the product CNC buy transactions in cash
segment only. Whenever a client places a delivery (CNC) buy order, the absolute
amount is deducted from the available limits only if this particular rule is selected
in the category.

6. Check holdings
This rule is applicable only for delivery (CNC) sell transactions in cash segment
only. This rule ensures that the RMS validate if the client has got sufficient
holdings in that scrip. Also once the execution happens the amount that is
realized out of the transaction is credited to the available margin by default.

7. Span margin order level

This rule is applicable only for the F&O orders which is accepted only for the
product MIS. This rule ensures that the span margin for the client is blocked as
per the span file that is uploaded in the system. The span margin is computed
takes into account the brought forward positions, the trades done during the day
and also the pending orders that are placed by the user. Since the pending
orders are also accounted the RMS takes the worst case and then blocks the
margin. The span margin that would be blocked is also dependent on the field
margin factor in the category. By default the margin factor is 1. If the Risk
Manager changes it to 1.2 the RMS would block 20% extra margin against the
applicable span margin. Similarly if the margin factor is set to 0.5, the RMS will
block half the actual span margin that is applicable.

8. Consider Realised Profit and Loss

This rule is applicable only for the product MIS and NRML and is applicable for
both cash and derivatives transactions. This rule ensures that if a position is
partly or fully close, then whatever is the profit or loss that was realized out of
that transaction is added or deducted from the available margin.

9. Consider unrealized loss

This rule is applicable for the product MIS and NRML for both cash and
derivatives transactions. This rule takes into account the open positions and
marks to market the average price of those open positions with the last traded
price of the respective security. If the client is making overall losses for these
open positions, only the loss is deducted from the available limits and in case the
client is making a profit, the same is ignored.

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