How is margining done for repo trades?
As in case of other trades, Initial Margin on a repo trade based on a security is computed by multiplying the Total Consideration by the Margin Factor applicable for the concerned security. The First Leg of the repo trade is considered for margining till it is settled. After settlement of the first leg, the second leg is considered for margining. An offset in margin is provided between two repo trades in opposite direction i.e. buy against sell or vice-versa, when the trades are based on the same security and have same settlement dates for both legs of the trades. No offset is allowed between the first leg of a repo trade and an outright trade whereas such offset is allowed between the second leg of the trade and an outright trade based on the same security and for the same settlement date. No MTM margin is charged on 1st leg of Repo trades unless the trade has been identified as having done at an off market price. MTM Margin on second leg of repo trade, if any, is treated as payable a
