Are auto-square-off mechanisms available during extreme market movements?

Yes, auto-square-off mechanisms are available during extreme market movements if the positions are hedged; however, they are not available if the positions are not hedged.

Auto-Square-Off and Market Volatility

• Share India’s risk management systems provide vigilant, real-time oversight of client positions. This proactive monitoring ensures that in dynamic market conditions, rapid price adjustments are carefully managed to safeguard against potential losses.
• To protect both the client and the firm from excessive risk, auto-square-off mechanisms may be triggered. These mechanisms are designed to automatically close out open positions when losses reach a predetermined threshold.
• Hedging and Auto-Square-Off:
  • If a trader has implemented hedging strategies, meaning they have taken offsetting positions to mitigate potential losses, the risk is reduced. In such cases, the need for an immediate auto-square-off might be less critical.
  • However, if a trader’s positions are unhedged, they are exposed to the full impact of market volatility. In these scenarios, the risk management system is more likely to initiate an auto-square-off to prevent catastrophic losses.
• Risk Management Policies:
  • There is a comprehensive Risk Management & Surveillance (RMS) Policy to make sure that customers are aware of criteria based on which Share India monitors risk and initiates actions to safeguard against such risks.

In essence, auto-square-off is a risk management tool that helps to prevent excessive losses during extreme market movements. The likelihood of it being triggered depends on factors such as whether the positions are hedged and the firm’s specific risk management policies.

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If you have any questions or need further support, don’t hesitate to contact Share India’s support team. You can reach us at 18002030303 or email us at support@shareindia.com.