Aadarna Stock Broking Pvt. Ltd. – AMFI-registered Mutual Fund Distributor, ARN-324924 | Distributes schemes of SEBI-registered Mutual Funds (see list & SEBI registration nos.)

Investor Glossary – Stock Market, Demat and Mutual Fund Terms Explained

Updated 2026-10-22 · Aadarna Stock Broking Pvt. Ltd.

ASBA · Authorised Person (AP) · Brokerage · CAS (Consolidated Account Statement) · Circuit limit · Contract note · DDPI · Demat account · Depository (CDSL / NSDL) · Depository Participant (DP) · Derivative · e-KYC · Exit load · Expense ratio · Expiry · Futures · IEPF · Intraday trade · IPO (Initial Public Offering) · KYC (Know Your Customer) · Lot size · Margin · Margin pledge · MTF (Margin Trading Facility) · Mutual fund · Mutual Fund Distributor (MFD) · NAV (Net Asset Value) · Nominee · Options · Riskometer · SCORES · SIP (Systematic Investment Plan) · SMART ODR · Square-off · Stock broker · STT (Securities Transaction Tax) · T+1 settlement · TPIN / e-DIS · Trading account · UPI mandate

ASBA: Application Supported by Blocked Amount. When you apply for an IPO, the money stays in your bank account and is only blocked. It is debited only if shares are allotted, and unblocked otherwise. Read more →
Authorised Person (AP): An entity appointed by a SEBI-registered stock broker and approved by the stock exchanges to act as the broker's agent for opening and servicing client accounts. An AP cannot accept client money or securities, give assured returns or give investment advice unless separately registered for it. Read more →
Brokerage: The fee your stock broker charges for executing a trade. Charges are as per the broker's published tariff. Read more →
CAS (Consolidated Account Statement): A statement from the depositories that shows your holdings across demat accounts and mutual funds in one place. Read more →
Circuit limit: The maximum price movement allowed for a security in a day. When a security hits its upper or lower circuit, trading in it may effectively stop for that direction. Read more →
Contract note: The legal record of every trade you make, sent by your broker. It shows the price, quantity and every charge and tax on the trade. Check each one you receive. Read more →
DDPI: Demat Debit and Pledge Instruction. An optional authorisation that lets your broker debit securities from your demat account only for specific purposes, such as delivering shares you have sold. Read more →
Demat account: An account that holds your shares, ETFs, bonds and other securities in electronic form. It is maintained with a Depository Participant on CDSL or NSDL. Read more →
Depository (CDSL / NSDL): The institutions that hold securities in electronic form in India. CDSL and NSDL keep the official record of what you own and send you account statements directly.
Depository Participant (DP): An agent of a depository, such as a broker or a bank, through which you open and operate a demat account.
Derivative: A contract whose value depends on an underlying asset, such as a share, an index or a commodity. Futures and options are derivatives. Derivatives carry high risk and most individual traders lose money in them. Read more →
e-KYC: Completing KYC online, typically using your PAN, an Aadhaar-based OTP or DigiLocker, and an in-person verification done by video or photo. Read more →
Exit load: A fee some mutual fund schemes charge if you redeem units within a specified period. The details are in the scheme documents.
Expense ratio: The annual cost of running a mutual fund scheme, charged as a percentage of its assets and already reflected in the NAV. Read more →
Expiry: The last day a futures or options contract is valid. After expiry it is settled and no longer exists. Read more →
Futures: A contract to buy or sell an asset at a fixed price on a future date. Both sides are obliged to complete it, and losses can exceed the margin you deposited. Read more →
IEPF: The Investor Education and Protection Fund. Unclaimed dividends and the related shares can move to IEPF, and you can claim them back through its process. Read more →
Intraday trade: Buying and selling the same security on the same day. Positions not closed by you may be squared off automatically by the broker. Intraday trading carries high risk. Read more →
IPO (Initial Public Offering): When a company sells its shares to the public for the first time. You apply through your bank or broker; allotment is not guaranteed. Read more →
KYC (Know Your Customer): The identity and address verification needed before you can invest. KYC is a one-time exercise: once completed through a SEBI-registered intermediary, it need not be repeated with another intermediary. Read more →
Lot size: The fixed minimum quantity in which a futures or options contract is traded, set by the exchange. Read more →
Margin: The amount you must keep with your broker to take certain positions, especially in derivatives or intraday trades. If your margin falls short, the broker can close your positions.
Margin pledge: Using shares you already own as collateral for margin. The pledge is created in the depository system and you authorise it yourself with an OTP. Since September 1, 2020, brokers can accept securities as margin only by way of pledge in the depository system. Read more →
MTF (Margin Trading Facility): A facility where the broker funds part of the purchase value of shares and you pay interest on the funded amount. It magnifies both gains and losses. MTF is governed by SEBI Circular CIR/MRD/DP/54/2017 dated June 13, 2017. Read more →
Mutual fund: A scheme that pools money from many investors and invests it according to a stated objective. It is managed by an Asset Management Company (AMC) and regulated by SEBI.
Mutual Fund Distributor (MFD): An AMFI-registered person or firm, identified by an ARN, who helps investors with mutual fund transactions and earns commission from fund houses. A distributor is not an investment adviser. Read more →
NAV (Net Asset Value): The per-unit value of a mutual fund scheme: its total assets minus liabilities, divided by the number of units. A low NAV does not make a scheme cheaper. Read more →
Nominee: The person you name to receive your securities or fund units if something happens to you. Keeping a nominee updated makes it much easier for your family to claim your investments. Read more →
Options: A contract that gives the buyer the right, but not the obligation, to buy (call) or sell (put) an asset at a set price before expiry. The buyer pays a premium; the seller takes on the obligation and the larger risk. Read more →
Riskometer: A scale shown on every mutual fund scheme indicating its level of risk. Check it before investing and compare it with your own comfort with risk. Read more →
SCORES: SEBI's online complaint system (scores.sebi.gov.in) for complaints against registered intermediaries, after you have first raised the issue with the intermediary. Read more →
SIP (Systematic Investment Plan): Investing a fixed amount in a mutual fund scheme at regular intervals through an auto-debit. It builds discipline and spreads your purchase price over time, but does not guarantee a profit or protect against losses. Read more →
SMART ODR: The online dispute resolution portal (smartodr.in) for securities market disputes that are not resolved through the intermediary or SCORES. Read more →
Square-off: Closing an open position by taking the opposite trade, such as selling what you bought. Read more →
Stock broker: A SEBI-registered member of a stock exchange through which you place buy and sell orders. Your trading account, funds and securities are held through the broker and the depository, not through an Authorised Person. Read more →
STT (Securities Transaction Tax): A tax charged by the government on buying and selling securities on a stock exchange. It appears on your contract note. Read more →
T+1 settlement: The settlement cycle for shares in India: a trade is settled on the next working day after the trade day. That is when bought shares reach your demat account and sale proceeds become available. Read more →
TPIN / e-DIS: A PIN issued by CDSL that you use to authorise the sale of shares from your demat account when you have not given DDPI. Never share your TPIN with anyone. Read more →
Trading account: The account with your stock broker that you use to place buy and sell orders. When you buy, shares move into your demat account; when you sell, they move out of it. Read more →
UPI mandate: An approval request in your UPI app that authorises your bank to block money for an IPO application. The application is incomplete until you approve it. Read more →

Read our investor-education articles for step-by-step guides.

Risk disclosures on derivatives

9 out of 10 individual traders in equity Futures and Options Segment, incurred net losses.
On an average, loss makers registered net trading loss close to ₹50,000.
Over and above the net trading losses incurred, loss makers expended an additional 28% of net trading losses as transaction costs.
Those making net trading profits, incurred between 15% to 50% of such profits as transaction cost.

Source: SEBI study dated January 25, 2023 on "Analysis of Profit and Loss of Individual Traders dealing in equity Futures and Options (F&O) Segment", wherein Aggregate Level findings are based on annual Profit/Loss incurred by individual traders in equity F&O during FY 2021-22.

This article is for investor education only and is not investment advice or a recommendation of any scheme. Aadarna Stock Broking Pvt. Ltd. is an AMFI-registered Mutual Fund Distributor (ARN-324924), earns commission from asset management companies, and is not a SEBI-registered investment adviser. Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing.