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Do Not Exercise’ to escape STT blow on in-the-money option

Posted on 31-Aug-2017 Comments  0

National Stock Exchange has introduced a facility in Equity Options contract, that will allow the trading member to Opt for “ Do not exercise” Instruction on  in- the money Contracts on the Expiry day. Presently, all open positions across in- the money Options contracts that are not closed by the clients/admin are automatically exercised and cash settled by the Exchanges. But under such circumstances, STT @0.125% on the full contract value is levied, and the clients end up paying higher STT charges.

As per this new facility, on every expiry day, the Exchange  shall send a file containing client wise Close  to Money ( CTM) contracts to the trading member , and the trading member after reviewing the positions has to specify to the Exchange , with  “Do not Exercise Option” before 4.30 PM.  In such cases, the exchange shall consider the member request and shall not exercise these ITM contracts, but these contracts will be treated as Out of  the Money contract (OTM) and positions shall be closed at Zero amount.

This facility is effective from 31st August 2017, the month end expiry and request you to take note of this and trade accordingly. Click here to view the Exchange circular


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