NISM Series VII Formula Sheet
Ten formulas, what each one is for, and a worked example.
Series VII is about what happens after a trade: margins, mark-to-market and settlement. The calculations are simple, but you need to know which figure the exchange or clearing corporation uses at each step.
These ten formulas cover them, with a worked mark-to-market example.
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The 10 Formulas
1
Formula
Trade value
Expression
Price × Quantity
Use it for
The base for brokerage, charges and margins.
2
Formula
Net settlement obligation
Expression
Total buy value − Total sell value (per security, per settlement)
Use it for
Funds or securities a member must pay in.
3
Formula
Mark-to-market
Expression
(Closing price − Trade price) × Quantity
Use it for
Daily notional profit or loss on an open position.
4
Formula
VaR margin
Expression
Position value × VaR %
Use it for
Margin covering a one-day loss at a set confidence level.
5
Formula
Total initial margin (cash market)
Expression
VaR margin + Extreme loss margin
Use it for
Upfront margin on a cash-market position.
6
Formula
Futures initial margin
Expression
SPAN margin + Exposure margin
Use it for
Upfront margin on a derivatives position.
7
Formula
Close-out loss
Expression
(Close-out price − Original price) × Short quantity
Use it for
Cost charged to a member who fails to deliver.
8
Formula
Average buy price
Expression
Σ (Price × Quantity) ÷ Σ Quantity
Use it for
Cost basis of a position built in several trades.
9
Formula
Net worth
Expression
Assets − Liabilities (as defined by the regulator)
Use it for
Checking a member's capital adequacy.
10
Formula
Turnover ratio
Expression
Traded value ÷ Market capitalisation
Use it for
How liquid a market or security is.
| # | Formula | Expression | Use it for |
|---|---|---|---|
| 1 | Trade value | Price × Quantity | The base for brokerage, charges and margins. |
| 2 | Net settlement obligation | Total buy value − Total sell value (per security, per settlement) | Funds or securities a member must pay in. |
| 3 | Mark-to-market | (Closing price − Trade price) × Quantity | Daily notional profit or loss on an open position. |
| 4 | VaR margin | Position value × VaR % | Margin covering a one-day loss at a set confidence level. |
| 5 | Total initial margin (cash market) | VaR margin + Extreme loss margin | Upfront margin on a cash-market position. |
| 6 | Futures initial margin | SPAN margin + Exposure margin | Upfront margin on a derivatives position. |
| 7 | Close-out loss | (Close-out price − Original price) × Short quantity | Cost charged to a member who fails to deliver. |
| 8 | Average buy price | Σ (Price × Quantity) ÷ Σ Quantity | Cost basis of a position built in several trades. |
| 9 | Net worth | Assets − Liabilities (as defined by the regulator) | Checking a member's capital adequacy. |
| 10 | Turnover ratio | Traded value ÷ Market capitalisation | How liquid a market or security is. |
Worked Example: Mark-to-Market Loss
A client buys 500 shares at ₹1,200. The day's closing price is ₹1,185.
- 1
Price change
1,185 − 1,200 = −₹15 per share.
- 2
Multiply by quantity
−15 × 500 = −₹7,500.
- 3
What happens
The ₹7,500 notional loss is collected as mark-to-market margin until the position settles.
Free account, this exam preselected.
Know Which Price Each Formula Uses
Mark-to-market uses the closing price, the trade uses the traded price, and auctions use the close-out price. Many questions change only which price is plugged in.
FAQs
Is mark-to-market a realised loss?expand_more
No. It's notional until the position is closed, but in derivatives it is settled in cash every day.
What is extreme loss margin for?expand_more
It covers losses beyond what VaR captures, the tail of the distribution.
Where do the margin percentages come from?expand_more
The clearing corporations set them, within SEBI's framework, and revise them often. Learn the structure rather than specific numbers.
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