Can I register with cdsl easiest at Zerodha.
I assume Zerodha won’t let you use easiest since people can manipulate it by transferring it and selling it in the secondary market on the same day.
Read this as well.
We don’t allow this and we’ve explained why here.
Auction penalty is broker’s risk or client’s risk?
I think you are intentionally giving misleading information to save yourself…
For example you said you have 50+50(cash +margin) policy for FNO because it is required by exchange but exchange did not say it is required at client’s end …exchange said its required at broker’s end. To be clear …Broker needs to maintain this ratio with exchange .that does not mean exchange has a rule that client needs to maintain that.
The risk of an auction arises when a customer sells a stock before getting delivery of the stock in the demat. So, if the customer sells a stock before delivery, the auction risk is on the customer, this is as per our risk management policy. But customer can avoid it by not selling the stock until it is in the demat.
Exchanges require 50% cash for any position taken at the broker level. But, if the customer doesn’t have the cash, it gets blocked from the broker’s own funds. Which means the broker indirectly ends up lending money. So if money is lent, there is cost of funds, and hence we ask for an interest on it. Brokers who charge a % brokerage let go of this interest because they make make more money by charging the % brokerage ( brokerage charges on the trade value and not margin lent, higher the value of the trade, higher the brokerage - so they have incentive in pushing customers to trade larger value) which is higher than the interest cost. In our business model of charging a flat fee per trade, it doesn’t make business sense to lend money for free.
I have conflicting information. Please look at this thread
Here @VenuMadhav said CDSL easiest is available at Zerodha …its just that client will not be able to see his holding on trading platform to sell .(which is fine …client needs to transfer to zerodha before selling)
So please confirm what is true.
Have replied on the other post, we don’t let you transfer stocks to our pool account and then let you sell.
Yes, I understand about margin provided by other brokers and there incentive behind it. But on this forum you and other working for Zerodha have said 'Exchange wants clients to maintain 50-50 (cash-margin) ratio …that is why I said it is misleading.
The same way auction penalty is paid by client …that is why I asked if its broker’s risk or client’s?
See its not a big deal but I have noticed couple of times where to validate/support your policy you try to imply that its either exchange or other govt. agencies’ rules and not your policies/rules…
Of course you are smart but my feeling is when you mislead(knowingly or unknowingly) …you loose trust/faith.
There’s nothing misleading about it. It’s just the way you interpret things.
Assume a broker has only 2 clients and the following are the carry forward positions and margins for the positions taken:
Client A: Nifty futures 1 lot long, margin required: Rs.1,00,000. Margin available: Cash 1,50,000
Client B: Nifty futures 1 lot short, margin required: Rs.1,00,000. Margin available: Cash: 12,000; Collateral 1,64,000
For the position held by the 2 clients, the total margin required is Rs.2,00,000. Of this, 1,00,000 has to come by way of cash and the other 1,00,000 by way of securities. Now in the above example, Client B has only 12,000 cash in the account. Assume the broker doesn’t have his own money in the business, where do you think the remaining 88,000 is going to come from for the position taken by Client B? Exchange regulations clearly state that one client’s funds and securities can’t be used to fund another client’s position. Its for this reason, we ensure that our clients also maintain margins in the same proportion as the Exchange requires. Today Zerodha has enough money in the business to be able to fund towards the cash component of the position taken by a client, tomorrow if it doesn’t, we may refuse to allow clients from taking positions unless they have cash:collateral in the ratio of 1:1
This isn’t our rule, this is the Exchange’s. If you find a broker who isn’t complying with this, suggest you stay cautious. You wouldn’t know if your funds are being used to fund another client’s position.
@nithin When it’s illegal then how come exchange doesn’t put a check to ensure that the rules are not compromised . You stated that client will not be able to no the end use of his idle funds and many brokers act in bad faith then what’s the use of this rule if proper compliance check is not there.
Hi @kartiks, sorry to hear this. Having this checked.