NRML Order Type
NRML — short for “Normal” — is the product type you pick when you want to carry a futures or options position beyond the same trading day. It uses the full exchange-mandated margin and does not get squared off automatically, making it the standard choice for swing traders and hedgers in the F&O segment.
Key takeaways:
- NRML is used in the futures & options segment to hold positions overnight, up to the contract expiry.
- It requires the full SPAN + Exposure margin specified by the exchange.
- There is no auto square-off; you choose when to exit before contract expiry.
- Lower leverage than MIS, but no end-of-day risk of forced closure.
- Compulsory physical settlement applies for stock derivatives if held into expiry.
Where NRML fits in the order window
When you trade futures or options at any Indian broker, you will be asked to choose between MIS and NRML. MIS is intraday-only with higher leverage; NRML is carry-forward with full margin. NRML is the default product type for positional traders and hedgers because positions can stay open until the last Thursday of the expiry month.
How margin is calculated under NRML
SEBI requires brokers to collect the full upfront margin as calculated by the exchange. This margin has two components:
- SPAN margin: Based on standard portfolio analysis of risk; covers worst-case scenarios for the position.
- Exposure margin: An additional buffer charged by the exchange on top of SPAN.
For example, one lot of Nifty futures might need around ₹1.1–1.3 lakh in total margin under NRML. The same lot under MIS might need only 40–50% of that, but with the catch that it must be closed by 3:25 p.m.
Carrying positions overnight
Overnight risk is real. Global cues, results, and macro news can cause gap moves at the next open. NRML lets you take that risk consciously. Mark-to-market (MTM) is applied at the end of each day — gains are credited and losses debited to your trading account.
If your account balance falls below the maintenance margin, the broker issues an MTM call and may square off the position the next morning if you do not top up funds.
Physical settlement on expiry
SEBI moved all stock derivatives to compulsory physical settlement in 2019. That means an NRML position in stock futures or in-the-money options held to expiry must be settled by delivering or receiving the underlying shares. The full notional value comes into play, which can be several times the margin posted.
Index derivatives (Nifty, Bank Nifty, FinNifty, etc.) are still cash-settled and do not have this issue.
NRML vs MIS in F&O
| NRML | MIS | |
|---|---|---|
| Holding period | Up to expiry | Same day only |
| Margin | Full SPAN + Exposure | Reduced (intraday leverage) |
| Auto square-off | No | ~3:25 p.m. |
| Best for | Swing trades, hedges | Scalpers, day traders |
When NRML is the right choice
- You are hedging a delivery portfolio with Nifty puts and want the hedge to live for weeks.
- You are running a covered call on a stock you already own.
- You have a multi-day directional view on Bank Nifty or a stock future.
- You sell options on expiry day after the 3:30 p.m. cut-off; only NRML works in that scenario.
Frequently asked questions
Can I convert MIS to NRML during the day?
Yes, as long as you have enough free margin to meet the higher NRML requirement. Brokers usually allow conversion until shortly before MIS auto square-off.
Is NRML available in cash equity?
No. NRML is a derivatives-segment concept. Cash equity uses CNC (delivery) and MIS (intraday).
What if my NRML option expires in-the-money?
For stock derivatives, you must take or give delivery of the underlying shares. For index derivatives, the position is cash-settled.
Does NRML cost more in brokerage?
Brokerage is identical for MIS and NRML — the difference is only in margin and square-off behaviour.
