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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3920)	3/24/1999 5:08:00 PM
From: Mohan Marette	Respond to of 12475

The what & How of BADLA Financing--> A place park investors funds for the short term. On the The Delhi Stock Exchange & the Bombay Stock Exchange, you can finance stock purchases by other investors (through the Stock Exchange's clearing corporation) who don't wish to take delivery but carry the position forward into the next settlement. The financing is done through the same Online Trading Terminals used for regular trading and should the stock broker default, your funds are covered under the Stock Exchange's Trade Guarantee Fund. You finance these transactions on a weekly basis. Badla rates usually vary anywhere between 20%-40% (usually around 45% during March due to Fiscal year end). We feel the rates are very attractive and the only risk that you have is that of broker default. Even in the event of a broker default, the stock exchange clearing corporation will pay you out of the Stock Exchange's Trade Guarantee fund. As an added protection, brokers pay huge margins in cash and bank guarantees to the stock exchange and the margins are increased based on the volume of broker transactions.You have to send the funds to your broker for badla financing. Your stock broker will place your funds on a weekly basis (every Saturday). He will then send you an e-mail on Saturday informing you the rate at which your funds were placed.Example: You tell your broker to place 1 lac in badla financing on a Saturday. He will find the best available rate on the trading terminal and place your 1 lac in funds. The broker will deliver the funds to the Stock Exchange's clearing corporation on Monday. You will get interest for 1 week upto next saturday. On the next saturday, you can decide to withdraw your money or invest it for another 1 week. (Courtesy:DSB-India)