DEMERGER OF NMDC LIMITED: IMPLICATIONS ON YOUR F&O POSITIONS.

NMDC has fixed a Record Date of October 28, 2022 for the purpose of issuance and allotment of 1 (one) equity share of Rs. 10/- each of NMDC Iron & Steel Limited for every 1 (one) equity share of face value of Rs 10 each to shareholders of NMDC Limited.

    1. What will happen to F&O open positions in NMDC Limited?

- All existing contracts with expiry dates October 27, 2022, November 24, 2022 and December 29, 2022 will expire on October 25, 2022.

- You can mark your existing positions for physical delivery before 11 am or square off on ICICIdirect on October 25, 2022. If neither of the above actions are completed on October 25, 2022, ICICIdirect systems will attempt to close the buy/sell Options position at 12:30 pm & buy/sell Futures position at 2:30 pm.

    2. When will the new contracts be available for trade?

-  New derivatives contracts on NMDC shall be introduced from October 27, 2022 (with expiry October 27, 2022, November 24, 2022 and December 29, 2022)

    3. What will be the new Strike price & lot size for Options?

-  The list of option strikes would be made available for trading on October 27, 2022 and strike prices shall be intimated to the trading members through a separate circular to be issued on October 25, 2022 aftermarket hours.

    4. How do I mark my NMDC position for physical delivery on ICICIdirect and when do I require funds or shares? 

-  To mark a position for physical delivery, you need to login to your ICICIdirect account, go to open position page before 11.30 am and click on ‘Choose Delivery’ against each stock contract and choose for Physical Delivery.

-  You can check in Delivery Mode details after choose physical delivery. Refer snap shot below.

Example: Suppose you are long futures or short put or buy call and are looking to take physical delivery, you will need to allocate cash equivalent of the contract value in your F&O fund allocation. 

-  Suppose you have short futures, long puts or short call and you intend to give delivery of shares, you need to ensure that you have sufficient free shares of NMDC in your demat account.

    5. What if for some reason like lack of liquidity my position couldn’t be squared off for September, October & November expiry contracts on October 25, 2022?

-  If for some reason like lack of liquidity etc. your position couldn’t be squared off, so In-the-money (ITM) option contract will be assigned to you. 

-  If you are holding long call options and it expires In-the-money (ITM), the contract will be assigned to you and if you don’t have funds to buy the shares, ICICIdirect will be forced to buy the stock on your behalf and sell next day. The equivalent profit or loss along with statutory charges will be passed to your account. 

-  If you are holding long put options and the contract expires in-the-money (ITM), you will have to give delivery of shares. In case the shares are not there in your demat account, it will go for auction. ICICIdirect will attempt to arrange the stock in Stock lending and borrowing scheme (SLBM) and give delivery of shares on your behalf and then sell. The loss on such transaction (difference between buy or sell) will be debited to your account. If any profit, it will be credited to your account.

    6. What is the closing price of NMDC on October 25, 2022?

- NMDC Spot weighted average price from 3 pm to 3.30 pm on October 25, 2022.

     7. What if the position is squared off before 3:30 pm?

- Client will receive MTM profit or loss on T+1 day.

     8. What if position is not squared off on October 25, 2022?

- Physical settlement will take place & according to your FNO open positions, delivery shares payin or payout will happen.

     9. When will physical settlement payin & payout happen?

- On T+2 days.

    10. When will the blocked margins get released?

- On T+1 day.

    11. What is the margin required for revised NMDC contracts?

- Margin will be as per the exchange rule of SPAN plus Exposure.

We urge you to monitor your F&O positions in NMDC and take timely action. 

Disclaimer: - 

ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code :07730), BSE Ltd (Member Code :103) and Member of Multi Commodity Exchange of India Ltd. (Member Code: 56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Ms. Mamta Shetty, Contact number: 022-40701022, E-mail address: complianceofficer@icicisecurities.com. Investments in securities markets are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The securities quoted are exemplary and are not recommendatory. Such representations are not indicative of future results. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investors should consult their financial advisers whether the product is suitable for them before taking any decision. The contents herein mentioned are solely for informational and educational purpose.