Changes in margin requirements from 1st Sep, 2020

Check a summary of the changes in the below table:

Action Till 31st August From 1st September
Stocks sold from demat holdings Can use proceeds to buy other stocks or trade in F&O No change since we debit stocks the same day and give them to the exchange under the early pay-in mechanism
Stocks sold from T1 holdings (i.e. BTST) Can use proceeds to buy other stocks or trade in F&O Can use the entire proceeds to buy other stocks and 60% of the proceeds to trade in F&O
Intraday profits earned Can use proceeds to buy stocks or trade in F&O on the same day Cannot use the earnings untill settled by the Exchanges i.e. T+1 for F&O and T+2 for Equity
Options sold Can use proceeds to buy stocks and trade in either currency or equity F&O on the same day Can use proceeds only to buy options in the same segment i.e. option sell credit for stock options cannot be used to buy currency options.

अगर आप इस टेबल को हिंदी में पढ़ना चाहते हैं -

ट्रेड क्रिया 31st अगस्त तक 1st सितंबर से
डीमैट अकाउंट से शेयर बेचना इस राशि से आप अन्य शेयर्स खरीद सकते थे या F&O में ट्रेड कर सकते थे इसमें कोई बदलाव नहीं है क्यों कि हम एक्सचेंज के अर्ली पे-इन क्रिया के अनुसार आपके शेयर्स बेचने के दिन ही आपके अकाउंट से एक्सचेंज को दे देंगे
पिछले दिन खरीदे हुए शेयर बेचना (BTST) इस राशि से आप अन्य शेयर्स खरीद सकते थे या F&O में ट्रेड कर सकते थे पूरे पैसों से आप अन्य शेयर्स खरीद सकते हैं या इस राशि के 60% हिस्से से F&O में ट्रेड कर सकते हैं
इंट्राडे प्रॉफिट - आज किये गए सौदे पर मुनाफा इस राशि से आप उसी दिन अन्य शेयर्स खरीद सकते थे और F&O में ट्रेड कर सकते थे इस राशि का उपयोग सेटलमेंट पूरी होने तक आप नहीं कर सकते - F&O के लिए ट्रेड के अगले दिन और इक्विटी के लिए ट्रेड के दो दिन बाद
ऑप्शंस बेचना इस राशि से आप उसी दिन अन्य शेयर्स खरीद सकते थे और चाहे स्टॉक या करेंसी F&O सेगमेंट में ट्रेड कर सकते थे इस राशि से आप सिर्फ ऑप्शंस खरीद सकते हैं। बेचने और खरीदने का F&O सेगमेंट एक ही होना चाहिए - स्टॉक या करेंसी

And for some more context:

6 Likes

If i sell share of rs 1 lakh , can i use this amount to buy another share of rs 1 lakh on same day,.
Or i need to wait t+2 days

Nithin has taken all effort to put it out, please give it a read before asking queries.

I have gone through the article. Nithin explained very clearly about everything.

@nithin

I just want to know how SEBI is taking care of retailers through this action.
Please explain if possible.

Hello Nithin,

How this amount (Profit from intra day trade, sell from T1 stocks) will be visible on Kite. How interface will look like? When 40% margin from T1 stocks will be released. Will it be next day or T+2 days form when it is sold.

We will do some changes to interface in coming days,

One can use full t+1 proceed to buy equity on same day, but only 60% can be used for fno.

So effectively I have below scenarios:
I buy rs 100 share and sell them on same day for 110. 10 will be available after T+2 days.
If I sell next day, entire 110 will be available?

effectively it will create 2 problems

  1. If the volumes in reality doesn’t go down after this rule’s implementation then it means that like most of the crypto exchanges NSE will be having wash trades just to make the instruments look like being liquid and to encourage participation.
  2. Because of lesser participation of overall public means a thinly liquid market . Such kind of market is highly vulnerable to manipulations. Again retailers loose here. What made sebi do this is beyond anybody’s understanding. U are supporting this move which is seriously appalling

Hi Nithin,

Thanks for explaining everything in detail, I need some clarification on the below

All realised intraday F&O profits and realised Marked to Market (M2M) profit in futures gets settled on T+1 day

Does this mean, let us say I have 50,000 INR in my account and bought 4 lots of Bank nifty 24500 CE at 500 INR and sold them at 600 INR, i.e. profit of 10,000 INR, Now the total margin available is 60,000 INR, will I be able to take fresh option for 60,000 INR or it is limited to 50,000 INR.

As per my knowledge, we were allowed to trade for 60,000 INR and if I carry positions overnight I will need to pay penalty for the difference of 10,000 INR and don’t need to pay any penalty if I don’t carry my positions overnight.

Could you please help me on this.

Thanks,
UV

Yes, you are right.

Yeah, you can only use Rs 50,000 on that trading day. The next day you will be able to use the entire Rs 60,000. Unlike before broker can’t allow to carry forward the position, even if client is ready to pay the penalty.

2 Likes

Thanks Nithin, I still remember the day, how Zerodha explained NSEL Scam in simpler way.

Thanks for everything.

if i bought 1 lakh worth of reliance today and on next day i.e T+1 day i got 5000 profit and i sold it …then can i use that 1lakh and 5 thousand rupees on that day (T+1day).

also do i need to have margin while selling that shares on T+1 day

Request to read the post before asking. No upfront margin is required to sell T+1.

Hi, Are there any changes to the amount of margin money? If for a position in nifty, I was keeping 50k as margin for 500 rs of premium, what changes from 1 September…amount wise?

i read that buy back of delivery stock not possible. why that ? cant the zerodha make it as intraday trade & credit amout on t+2 day ? also what in this situation, suppose i have 200 shares of reliance and i sold only 100 from it than what should happen ? i am a bit confused about it.

No changes in margin requirements until December 1st, from then onwards margins required to trade F&O in MIS will start increasing in phased manner. More on that has been explained in this post.

Hmm… where did you read that? Did you read this post?

@siva you can come at least margin funding
And please update new list of pledgable securities in mutual fund

Liquidity in any market is driven by market makers. In equity, currency, commodity retail fraternity is not market maker but institutions or quasi institutions. In fact as much as 99.4% currency transactions are dominated by them. I don’t know the equivalent number for stocks in India, a year back it was above 90%…don’t think much changes will be there. Whether institutions will cut down volume, too early to say without data.

Hence liquidity concerns are an excuse by few brokers who were indulged in all sorts of financing the speculation. I remember I was offered even 30-40X margin few years back, it’s not only ruin the system also ruin one’s financial net worth. Always better to build wealth progressively than on margin steroids.