Dynamic Margins

This part made it sound different (before your clarification)

Oh okay. May be. I didn’t realise. May be it did. Then am glad I clarified. Honestly, I am not against them.
What I meant was their team should know how to close positions and keep the brokerage to minimum. Also I felt separate call and trade charges weren’t required because brokerage was already 40 rupees per order instead of 20.

Today was a one-off for the reason mentioned before of this large quarterly settlement process. But if any one of these days SGX Nifty is, say, down/up by 3 % or over, maybe we will have to tinker margins on that day. This has been a normal practice for many years, and every broker’s risk management should ideally be proactive on this.

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@Jason_Castelino no one on our risk management team or across the business has any revenue target. If they exited smaller portions, it would be mainly to help you and not in any way to generate a slightly higher brokerage. Our business wasn’t built that way.

A customer is in absolute control all the time to ensure the account doesn’t go into debit or negative margins. This additional Rs 20 for exiting orders when accounts are in debit/negative margins is to nudge customers to take action on their own to manage their positions within the margins available.

In the above context

No matter what you say, I felt exactly how Jason is feeling here when my positions were auto squared off a few weeks back. My utilisation went up to 103% of the required margins, and within 20mins of the margin call (mail!), 1 lot was squared off. In my opinion, one key responsibility of the Risk management team should be to grade users on a risk scale (high risk to low risk). Based on my 2+ yrs of active trading data, I will fall in the “very safe” category if there ever is one, and it was very surprising that the positions were squared off in such a hurry.
And for all you know, the 3% over utilisation may have been artificially created as zerodha asks for a margin buffer (above and over what’s required by exchanges).

The call and trade charges may serve the same purpose, if this is the true intention. No need to charge double brokerage I guess

Today the regulator has set a rule that there will be a margin penalty if customers’ margin utilization goes above 100%. Until August we had taken a stance that this penalty can be passed to the customer, so we will let the customer decide. But we had to revert the stance once the NSE circulars were out. So if we don’t square off the position, the penalty is on the broker to pay now. So unlike before when we would make exceptions based on the customer history, today there is no such option. If we make an exception, the penalty is on us.

We charge only Rs 20 additional if any order is placed in FO when margins are negative or account in debit. These additional call and trade charges are when our risk management team manually squares off orders. Like I said earlier, we expect customers to take action on the positions and ideally, we would not want to interfere in anything. Involving our RMS team to manually track positions and square off positions is an additional effort, which we don’t want to be doing.

Partially agree. You may not have revenue targets. But how does exiting in smaller portion benefit the client?

I had surplus balance in my account. Otherwise how would I take positions in first place?
But let’s assume I had exact margin and not a rupee more. Kindly check the screenshot. My margin has gone upto 115 percent. So there was almost 18 percent increase in margin because I already have at least 4 to 5 percent surplus. Also I have no idea how margin increased so much since vix fell at least 4 percent on Thursday. None of my strikes were anywhere close to spot price. Anyways this is one thing I have always failed to understand.

After receiving this message guess how much time I got to react? Less than a minute.

Your team started squaring off positions. And if you see the sequence of the order you will see the positions on same side continuously closed. So how will you justify saying it’s intentionally done so that hedge isn’t broken? Instead of repeating same order 3 times ie 18200ce don’t you think it can be closed in one single order?

Even after struggling so much your team wasn’t able to bring it to positive. See the last two orders. How did I close it. One on call side, one on put side with maximum possible order size. If your team had done this at first then brokerage would have been just Rs.80.
Even then when I raised the issue with your staff I was fine with it and didn’t want to escalate it further. Next day I see call and trade charges are there for each order.

I am sorry but you didn’t even give me a minute to act.

Same. All my contracts were deep OTMs. I do not have to tell where nifty expired last Thursday. And just see my positions. But I understand penalty norms and it’s justified squaring it off. My issue is just multiple orders.

Very much possible.


Deep NIFTY OCT OTMs that were around 78K margin per lot of (CE,PE) pair last week was quoting 93K today. unbelievable !!

@nithin @Bhuvan @Meher_Smaran

It is understood that zerodha is charging 4% additional margin on option selling in intraday as compared to margin charged by exchange.
But it is observed that in ledger also, end of day margin blocked is also 4% higher than required by exchange (as provided by zerodha in daily margin statement). This is leading to additional expenses of 0.035% on negative available cash on EOD basis.
Kind request to correct this anomaly in ledger and charge only margin required by exchange in ledger and not 4% extra margin.


Can you DM me your client ID, I will loop in to check on this.

Ah, this is a miss from our side. We started this only recently; we will have it fixed asap.

@Ananth, can you follow up on this and update here?

Yep, on it. Will update here once we fix it.

@nithin what is the extra margin in % that zerodha blocks apart from the one required by the exchange.
Ideally Zerodha RMS team should not sqaure off any position till the margin required by exchange goes into negative ; not the one blocked by Zerodha. Customers incur unnecessary losses. and the square off should only after 5 pm since margin penalty is applicable for EOD margin not any intraday peak margin anymore.

Are you from Zerodha, where is your Zerodha blue badge/logo in DP?

He is from Zerodha @GB26 :slight_smile:

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? :slight_smile:


sorry i meant 3 pm

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kindly verfiy 3 to 4% :smiley:

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.