Under the Badla system, a trader would buy or sell a security on margin, and then square off his position by selling or buying the same security on the next trading day. The trader would pay a certain percentage of the transaction amount, known as the "covering margin," and the balance amount would be paid on the next trading day. If the trader failed to square off his position, he would be required to pay the full amount of the transaction, along with interest and other charges.
A trader analyzing this would conclude that leverage costs are moderate and bulls control the market.
If you are a researcher searching for live "index of badla" data, your best bet is the . Mauritius retained the Badla system (officially termed "Carry-Over Facility" or COF) long after India banned it. index of badla
To understand the state of the market, analysts would look beyond the benchmark KSE-100 Index and focus directly on the —a collection of key metrics. These indicators provided a real-time gauge of speculative froth.
Assume a market with a settlement cycle of 14 days. The exchange calculates: Under the Badla system, a trader would buy
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Badla was an indigenous, automated carry-forward system designed to solve the liquidity crunch in the Indian secondary market. It essentially allowed a speculator to buy shares without paying the full amount immediately, or to sell shares without owning them, by carrying the transaction forward to the next settlement period, which was typically 70 days. How Badla Trading Worked A trader analyzing this would conclude that leverage
: The exchange computes a Badla charge of ₹0.50 per share based on current market demand. The trader pays ₹500 to roll the trade over, sustaining a highly leveraged position with minimal out-of-pocket capital. 3. Comparing Badla vs. Modern Futures & Options (F&O)
India’s banking sector historically restricted direct institutional funding for stock speculation. Badla bypassed this friction by tapping private pools of capital to inject liquidity into secondary markets.
The financier would pay the seller (B), take delivery of the shares, and hold them as collateral until A paid the full amount plus interest.
In the context of Indian stock markets, "Badla" was a traditional mechanism used to carry forward trades to the next settlement cycle. It functioned as a form of margin trading and lending system. Key Features of Badla
