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Why my Funds moved automatically to different segments in Flattrade?

PostedJanuary 20, 2025
UpdatedJanuary 20, 2025
ByManoj

Funds move automatically between segments due to the settlement process and margin requirements. Here’s why this might happen:

Funds in Flattrade are automatically moved between different segments due to the settlement process and margin requirements, governed by exchange regulations and Flattrade’s operational policies. Below is a detailed explanation of why this occurs and how it is managed:

1. Settlement and Allocation Process

India has two primary clearing corporations responsible for handling trade settlements:

  • NCL (National Clearing Limited): Handles settlements for NSE and BSE trades across Equity, F&O (Futures & Options), and Currency segments.
  • MCXCCL (Multi Commodity Exchange Clearing Corporation Limited): Manages settlements for MCX trades in the Commodity segment.

As part of the settlement process, funds are allocated to respective segments daily based on your trading activity. This allocation ensures smooth trade settlement as per exchange guidelines and mitigates risks of default.

2. Flattrade’s Cross-Segment Fund Management

Flattrade simplifies fund usage by allowing clients to access funds across segments (Equity, F&O, Currency, Commodity) without the need to maintain separate balances for each segment.

  • The “Move Fund” feature enables clients to transfer funds between segments as required.
  • This feature is instant and free, giving clients full flexibility in managing their funds.

3. Daily Fund Allocation Based on Client Enablement

Funds are automatically allocated to various segments daily, considering:

  • Segment Enablement: If you have multiple trading segments (e.g., Equity, Commodity) enabled in your account, Flattrade allocates funds to all segments.
  • Unpredictable Trading Activity: Since Flattrade cannot anticipate which segment you will trade in, funds are distributed to ensure you can execute trades seamlessly.

You are advised to check your available funds daily before initiating trades in any segment. If a fund shortfall is observed in a specific segment, you can manually transfer funds using the “Move Fund” option.

4. Exchange Settlement Rules

The automatic movement of funds is also influenced by exchange regulations, which require funds to be allocated based on trade activity and settlement obligations:

  • Settlement Pools: Proceeds from selling shares in the Equity segment might be moved to a settlement pool for finalization.
  • Margin Adjustments: Margins blocked for F&O or Currency trades are dynamically adjusted as per open positions and exposure.

5. Daily Margin Updates

To ensure compliance with margin requirements for open positions:

  • Flattrade reallocates funds across segments to avoid margin shortfalls, ensuring that penalties or additional margin calls are minimized.
  • This process is crucial for maintaining a seamless trading experience, especially in segments like Derivatives and Commodities, which have stringent margin requirements.