Suppose that the position at the beginning of day one is as follows:
 

Member’s Liquid Assets	Cash equivalent deposits 35,00,000 Securities deposits (net of haircuts) 40,00,000
Member’s Open Position	200 contracts long in the 3 month contract
Futures Prices	3 month contracts is Rs. 1,00,000 1 month contract is Rs. 98,000
Initial Margin	5%
Days to expiry	Fifth day before expiry of one month contract

The margin and capital adequacy calculations will be as follows:

• Initial margin = 5% * 200 * 1,00,000 = 10,00,000
• Total open position = 2,00,00,000
• Total liquid assets will be treated as 70,00,000 only since at least 50% of total liquid assets must be in cash equivalents (see 5.3).
• Liquid net worth = 70,00,000 - 10,00,000 = 60,00,0000

Condition 1. 60,00,000 > 50,00,000

2. 60,00,000 * 33^1/3 = (20,00,00,000) > 2,00,00,000.