"Bank Option" Order Getting Rejected

I placed an order for BANKNIFTY19APR1826000CE NFO at 3.1… there was sufficient fund, still order got rejected with error… “RMS:Rule: Option Strike price based on Ltp percentage for entity account-RH1037 across exchange across segment across product”… I tried for both MIS & Normal type.

what could be the problem?

sir, you can read this
if you are facing such problem

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Hello Vijender, Thanks for reply…

I’m placing regular order, neither BO or CO. I tried both MIS & Normal. No luck.

Order’s getting rejected only in this particular option only. Call orders in other BANKNIFTY getting executed say BANKNIFTY2560019APRIL2018… It was happening yesterday also, in same option. Can’t understand.

Is it because “Net Change” is negative for the option? For 25600 CE it’s positive… :slight_smile:

Good Day, :slight_smile:

sir,

tag nithin or shiva. they should consider or clear the query.

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Look, exchange has put this restriction that a trading member (broker is also a trading member) can’t have more that 15% of all market wide Open Interest in BankNifty Options. It’s like Quota system, a broker can’t have more than 15%. So within Zerodha client base (including Zerodha prop desk) whoever grabs these 15% in First-come-first-serve basis will be able to grab BankNifty options strikes that are more than 300 points OTM. So since currently BankNifty is trading somewhat sideways these days so most early birds have already taken positions to benefit from far OTM Options time decay and have occupied the 15% quota seats. You must be late in the game so no more seats left. Zerodha has grown very big now, you must have received their email that they have become 3rd largest broker, so there is stiff competition amongst their clientele to grab the 15% quota in BN options, so if you are really desperate to trade in BankNifty Options then obviously a less crowded bus would be required.

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tanmay,

it can not be because 15% position of member is reached, if so every second person will face the problem in all big brokerages. the big players who take heavy positions ( HNI’s, FUNDS, FII’s ) become member of exchange and don’t depend on brokers limit.

it can be because of far out of the money contract or some technical issue only.

It’s NOT because of any technical issue. There have be 4 threads previously where people have talked about this issue and what reply they got from [email protected]. The first time I faced this issue I called up support and their personnel explained it in detail. And clients with big brokers do face this issue and HNIs/FIIs are members of exchange and the 15% limit ALSO applies to them.

Same issue I faced today and yesterday as well. Something is not right.

this limit includes all strikes and futures, whenever you face such problem try some on at the money or futures, your doubt will be clear.

that’s what i wanaa say, their limit is 15% and brokers limit is another 15% not same.

support answer are unsatisfactory to majority of people, their answer are just as reading a written statement.

Alright… I will try this.

Yes, I received the same reply from Zerodha support staff that the 15% quota calculated at that point in time has be reached for Zerodha so my far OTM Bank Nifty order got rejected. They advised me to chose a strike within 300 points of current Bank Nifty spot price to avoid this issue. I told them that my strategy does’nt permit to chose a strike so near to the spot price, so they advised me to try out Nifty options where this restriction does’nt apply.

I am able to buy the BANK NIFTY WEEKLY CE OPTIONS but when I try and place a BUY order for the BANK NIFTY PE OPTIONS, the order is getting rejected and the following message is being displayed , “RMS RULE : OPTION STRIKE PRICE BASED ON LTP PERCENTAGE FOR ENTITY ACCOUNT ********* ACROSS EXCHANGE ACROSS SEGMENT ACROSS PRODUCT”

May I know what is the issue here??
Regards.

you could have asked them when 15% reached how near strikes options and futures are getting executed on same terminal.

I am worried as I am also working on a strategy involving OTM options.

The RMS error should be coming from Zerodha.
It looks like Zerodha is not allowing trades in deep OTM options.

Can you tell me what the value of Bank Nifty when you place the order? and What the order is? Is it buy or sell / limit order or market order?

My wild guess… Zerodha put a rule on their server not allowing Bank Nifty option trades when the strike price is more than 2% away from LTP of bank nifty. Possibly they put this when weekly options where introduced and did not remove it later. May be a client account created some time after BNF weekly option introduction does not have this rule.

Or Zerodha is being bad… they somewhere calculate notional value of options for some limits and decided not to allow otm bnf options… which would breach their limit.

Or Zerodha is being too good here… they put a rule disallowing clients from trading bnf otm options… may be zerodha saw too many clients lose too much money. :grinning:

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Can you check what was % of the (Strike - BNF LTP) to Strike? I guess there is some arbitrary limit of 2 or 2.5% by Zerodha.

edit: I tried buying option whose strike was 1.85% away from LTP. But order got rejected with the same error.

I tried buying OTM option and got the same rejection error. This does not look like a limit imposed by exchange. I believe Zerodha has some arbitary RMS rule which blocks buying OTM options. @nithin should investigate this seriously.

I am working in a strategy which involves buying deep OTM option as hedge. Looks like I have to go to a different broker. :hushed:

Yes, they said it’s a rule… I did’nt see a point in arguing with the support staff as he was just an employee following the rules laid down by his organization, he does’nt have any powers to change things anyways…

it would be difficult to execute with Zerodha… I tried selling 500 points OTM strikes but it gets rejected repeatedly despite having ample margin.

:smile: I don’t think they are being bad… I guess it’s some exchange defined rule to limit BN open interest exposure among it’s trading members. It’s just that Zerodha has become very big/crowded.

From: https://www.nseindia.com/products/content/derivatives/equities/position_limits.htm


Index Options
The position limits of Trading members / FPIs (Category I & II) / Mutual Funds in equity index option contracts is higher of Rs.500 crores or 15% of the total open interest in the market in equity index option contracts. This limit would be applicable on open positions in all option contracts on a particular underlying index.

So why would Zerodha block OTM option trades? May be they are doing it proactively to ensure that they dont reach the limit. But it is definitely not good for traders.