3 to 4% more. So if the Nifty futures minimum margin is Rs 1.1lk, we might ask ~ Rs 1.04lks.
Our RMS team reduces by 4% to decide on squaring off positions.
You are mistaken. There is still a penalty on the intraday peak margin; the only thing that has changed is that if the SPAN margin goes up for a contract during the day, then the margin penalty is based on the beginning of the day margin and not what has gone up during the day.
So if you bought Nifty in the morning when margin was Rs 1lk and say at 2pm exchange increased the margin for this to Rs 1.05 lks due to increase in volatility, in this case margin is calculated on Rs 1lk itself to determine penalty. But otherwise, if your account is anytime negative margin during the day, peak penalty is applicable.
Btw, how do you square off positions at 5pm after market closes?
its currently around 5.2%
Im comparing inr.106,614 from order window with NSE SPAN file latest 1st intra-day nsccl.20221011.i2.zip
SPAN is 1684.1(in pts) and 2% Exposure of Index notional(17240) comes upto inr.101,355
You are looking at live SPAN & exposure; as I mentioned earlier, all brokers now use beginning-of-the-day SPAN+Exposure after the change in regulation, where the margin penalty is based on beginning-of-the-day (104%) margins. It was 104% as of BOD; it might feel higher since margins would have gone down intraday.
By having a small 3 to 4% buffer, we ensure that customer, as soon as taking a trade, doesn’t end up being short margin and hence pay a margin penalty. Otherwise, square-offs will have to happen much faster.
There is no EOD penalty; there is upfront and non-upfront. If the margin goes up by the end of the day, it is called upfront, and brokers have to pay the penalty from their pockets. Check this post.
Today the squaring off is manually done by our risk management team. We essentially see customers with the highest margin shortfall and come down that list at every point. Since all the additional leverage has been removed, everyone can use only 100% of the margins. The only time when margins go up is when a single position being exited increases the risk of F&O portfolio and hence margin going up. I am guessing your margin is also going up to 100.1% by doing this. When this happens, we now try to square off positions as soon as possible, as there can be a margin penalty due to this. There are a million clients trading daily, and our RMS team has approximately 20 on it, so as you’d guess, it is nearly impossible to square off all positions with margin shortfall. So no, it can’t happen within 1 min; it takes a lot more. We would send some notifications before squaring off positions. Hence the additional buffer margin also helps; it then gives sufficient time to add more (doesn’t help in case hedged positions are unhedged and when margin shoots up 100’s of %).
Margin going up is one reason, and the other is when there are marked-to-market losses in the case of futures. These losses can be brought in before the next morning, so we typically would wait until losses exceed 20% of the margins available before deciding to square off. Again a notification is first sent.
Even in the back office the margin blocked will be 103 to 104%, like on the trading platform. If it is not, the next day morning when the markets open, the customer could be at exact 100% and forcing us to auto square off positions. But interest cost is calculated on 100% or exchange minimum margins, so there is no additional interest cost.
The status of all the concerns I had raised above now stands resolved. I just wish support team had done a better job before I escalated it here in public.
@nithin when will the limit on buying far out of the money options to hedge your sell option positions be lifted. Right now I can only buy the same quantity as I sold. Why is there a cap on buying far out of the money nifty index options, this really restricts trading strategies.
Zerodha is increasing margin intraday hugely …and then charging extra brokerage,of 40 rs per order…and this extra margin is also…then not shown in daily margin statement.Real Example: Trade date: 14 oct: on about 20 lac…margin…my margin blocked was 18.7 lacs…and it happened after i took…2 position(all option sell)…between 9:15 to 9:30…AM…so my free balance was showing as 1.3 Lacs…but suddenly after approx 12-1 Pm…my 1.3 lacs…positive margin became…(-67k)…so increase of about 2 lacs…So…I urgently added…1 lac…more…fund…leading to positive balance of 35k…I sq off one position at about 2:30 Pm…So…my Total Order placed for the days was 3…(2 in morning)…But my brokerage charged was 100 Rs instead of 60 Rs…and in Daily margin statement…peak margin collected is shows as 17.5 lacs only…instead of intraday high reached of 20.5 lacs//so …3 lacs difference plus extra brokerage charged…and this has not happend first time…In August also…zerodha did same to me…and brokerage was reversed…after raising ticket but no explaination was given.
So, I like fool, now need to check my brokerage daily and keep writing u mails…for excess brokerage charge by You…
Please reply…What is happening…and arrange a call of a customer care…to explain…why they are repeatedly charging excess brokerage due to this new Fishy rule…of Zerodha and then reversing it …if and if…some customer are raising this issue…n most will not even know…n will keep giving extra brokerage…as they Trust in Zerodha…but…clearly…dat is not happening …as this new rule is untransparent and leading to incorrect brokerage charges as Zerodha is increasing margin more then exchange requirement and then charging extra brokerage.
As you know yesterday (October 14) market was moved drastically, New span has been updated by 1 PM to cover up for the margin increase due to volatility. Once the span got updated margin may get increased in your account which leads to a negative balance in your account. we are uploading a new span so that clients whoever having the position wish to carry forward bring the additional margin money as soon as possible otherwise penalty will be applicable for the short collection of margin. The peak margin will be calculated based on the beginning of the day span so only its shows 17.5 lakhs.
As your account went in negative extra brokerage was charged.
i placed order between 9: 15 to 9:30 AM…at dat time.my margin was not negative…so…how extra brokerage can be charged.
In addition…I added…extra 1 Lac…wen margin got briefly negative to -67k…and then only placed a third order to sq off a position…
So, all three orders were placed wen margin was positive…but brokerage has bee charged as 100…instead of 60.
I have mentioned you… precise chronology of events…Now zerodha need to come up with explaination of 100 Rs…brokerage…with mention of order -ID…means…on which orders…brokerage was 40
We explained the reason for the increase in margin yesterday which leads to a negative margin and the peak margin calculation. Kindly raise the ticket for more account-specific details.
