Hi @SachinSingh,
Regulations mandate that 50% of the margin can come from collateral margin and the remaining 50% has to be in cash. If cash margin is not available, it can be funded by the broker’s funds. At Zerodha, if you don’t have the 50% cash requirement, we fund the same and charge a nominal interest of 0.05% per day.
What has changed recently with this SEBI circular(Annexure 3 Page 16) is that brokers are required to allocate cash and collateral margins on a client-by-client basis instead of at the broker level.
For example, if client A has Rs 200 collateral and client B, C, and D have Rs 100 cash each. The broker now has Rs 200 collateral margin and Rs 300 cash margin.
Client A, B, C, D all take FO positions requiring margins of Rs. 100 each. The exchange will block 50% of this from the collateral margin and 50% from the cash margin. So Rs 200 collateral and Rs 200 cash.
From December 1st, it will be on a client level, so for B, C and D, exchange will block their respective cash margins of Rs 100 each. For A, Rs 50 collateral margin will be blocked and Rs 50 will be additionally blocked from the broker’s funds maintained at the exchange.
TLDR; At Zerodha, there won’t be any change to our clients due to this regulation as it is a back-office allocation change of funds.