Are there still margin shortfall penalty applicable with Zerodha?

F&O
1

I have a few options positions for which margin requirements have increased due to volatility and my fund balance has gone into Negative.

Now that Zerodha charges Rs 40 for orders placed with negative balances, I want to know if there will still be margin penalty applicable (1%/5% as per no. of days)?

Can I simply keep those positions open with my account running in negative balance?

2

EOD (End of day) margin reporting will be based on BOD (Beginning of day) margin parameters. So If the margin got increased after EOD, you have a day time to bring in the funds. If you have funds based on the BOD margin factor there won’t be any penalty. If there is a shortfall even on the BOD margin, the margin penalty will be on brokers.
If you don’t maintain the funds your position may get closed.

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3

Will it be levied to us as well or just on brokers?

What I understand is - when my account goes into negative, then I have 3 risks:

  1. Risk of positions being squared off by the broker
  2. 18% interest on the outstanding amount, and
  3. Higher brokerage per order (Rs 40 instead of 20)

What I want to undersy is - Apart from these above, are there any other risks as well (like short margin penalty or any other charges/risks)???

Thanks

4

In your above case, it will be on brokers. If the shortfall happens due to MTM loss and the clients fail to bring the funds then the penalty will be on the clients.
Your understanding is correct. Apart from that no other charges.

5

Thanks for your reply. Just one more thing to confirm, in the above you meant “MTM loss due to Futures” only right? - and not the MTM fluctuations due to running options positions (where no orders are placed during the day).

6

Yes only in futures.

7

Till few days back (may be till a month back), account balance was getting updated after market hours around 4:30-5 pm. And if account/cash balance shows negative then we are supposed to neutralise it. But now that after hour account balance update is not happening and couple of times I have seen negative balance on the next morning. Does that mean - in such scenario I would have been charged by Zerodha for negative balance?

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