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Stock Split in TATA STEEL LTD Implications on your FnO positions

TATA STEEL has fixed a Record Date of July 29th, 2022 for the purpose of stock split in the ratio 10:1 i.e. each fully paid-up Ordinary (equity) share having face value Rs. 10/-(Rupees Ten only) each, into ten (10) fully paid-up Ordinary (equity) share having face value Re. 1/- (Rupee One only) each. The ex-date being July 28th, 2022.

What will happen to F&O open positions in TATASTEEL?

Clients holding F&O contracts expiring on 28thJuly 2022: Contracts are liable to be physically settled if not closed before market hours
You can mark your existing positions for physical delivery before 12 noon or square off on ICICIdirect on 28th July 2022. If neither of the above actions are completed on 28th July by 12 noon, ICICIdirect systems will attempt to close the buy Options position at 01:30 pm & at 2:30 PM for Sell option position and futures positions.
Clients holding F&O contracts expiring on 25th August 2022 and 29th  September 2022: These contracts shall expire on respective expiries & will be adjusted according to the framework prescribed by SEBI. The adjustment for Futures will be in terms of Price and Lot Size & for Options, it will be Strike Price and Lot Size.

What is adjustment factor in TATA STEEL?

Adjustment factor for Stock split of A: B is defined as (A/B). In the case of TATA STEEL, the adjustment factor is (10/1) = 10, since the split ratio is 10:1.

What will be the new price & lot size for futures?

The adjusted market lot will be arrived at by multiplying the old market lot by the adjustment factor. The revised market lot size would be 4250.

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

Strike Price: The adjusted strike price will be arrived at by dividing the old strike price by the adjustment factor i.e. 10.
Lot Size: The adjusted lot size will be arrived at by multiplying the old market lot by the adjustment factor. The revised lot size would be 4250.

How do I mark my TATA STEEL positions for physical delivery on ICICIdirect and when do I need to have funds or shares? 

To mark a position for physical delivery: Sign in to your ICICIdirect account, head to the F&O open position page before 12 noon and a new link to ‘Choose Delivery’ will be available against each stock contract. Click this to mark for Physical Delivery.

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

Suppose you are long on the stock with long futures, short put or buy call and to take physical delivery, you need to allocate equivalent cash 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 TATA STEEL in your demat account.

What if for some reason, like lack of liquidity, my position couldn’t be squared off for July expiry contracts on 28th July 2022?

If for some reason like lack of liquidity etc. your position couldn’t be squared off, then an 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. In case of any profit, it will be credited to your account. 

What is the closing price of TATA STEEL on 28 July 2022?

TATA STEEL’s weighted average price from 3 pm to 3.30 pm on 28 July 2022.

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

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

What if position is not squared off on 28 July 2022?

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

When will physical settlement payin & payout happen?

On T+2 days.

When will the blocked margins get released?

On T+1 day.

What is the margin required for revised TATASTEEL contracts?

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

We urge you to monitor your F&O positions in TATASTEEL 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): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investment 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 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.