Dynamic Margins


why is my margin showing differently than what is reflected on my margin statement. on margin statement i have 2 lac surplus and on actual margin kite page it is showing -50k ? why is there no transparency?

Hi Ankit, this can happen if there is a margin increase in BOD (Begining of the day) margins. Would suggest you create a ticket at support.zerodha.com, team will have this checked and assist you.

@ShubhS9 i have noticed that every moday the margins always goes up for existing positions? What is the reason for this?

The situation is still the same. Why are the positions getting squared off lot by lot? There are a few more issues with the way margin utilization and risk is being monitored by zerodha. Have raised a more detailed ticket here: #20230615649399. Just wanted to bring this to your notice as well.

I will tell you one more case. This happened a month back when nifty was at 18200.

I had long position on futures for let’s say ‘x’ lots.
I had also short 17700pe and 18600ce with ‘60x’ lots. This was Thursday and my OTM were trading at less than 1 rupee at 9.20AM.
My margin went negative for some reason and the risk management team closed my futures positions lot by lot. They had to just close few lots of OTMs. It wouldn’t make any much difference since they were anyways ending at 0. After they closed nifty went up by 100 points and I didn’t even know my long futures were closed. Afternoon luckily for me nifty fell down to the same level and I added back my futures after closing few OTMs.
I can’t complain because I should have made sure my margins were positive. But some care could have been taken to close positions. Futures move fast and my OTM were not even moving.

I dont know if this is funny or sad.

Hi @abcd5662
We tried reaching you several times but there was no response from your end.

We would like to bring to your attention that sms and email alerts regarding your margin shortfall were sent around 8 AM. So you had an hour and a half to add funds or 15 mins to reduce your positions as per your desire before the RMS team took any action. We hope you are aware of the new Peak and EOD (upfront) margin penalty changes from May 2, 2023. Your margin shortfall for yesterday (14/06/23) was approximately 2.34L.

Since you had hedged positions with CE short 15Jun2023 multiple lots and PE short multiple lots across various expiries from 15Jun2023 to 31Dec2026, we had to reduce both sides. Ideally, 2 lots on both sides are generally enough to free up around 2.3L cash in nifty. Because of the vast calendar spread in your portfolio and based on LTP, We had to square off an additional lot to make up for the same.

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I can understand it makes sense for you guys, since you’ll be making double the brokerage (on account of negative margin balance) and call and trade charges - with every order you punch in. So you’ll always find a reason for doing it.

I’m grateful the team was kind enough to not touch my long term illiquid positions. I guess the users are helpless here, at the mercy of the team’s judgement.

Btw there was a third issue highlighted in the ticket which you missed replying to.

Hi @abcd5662,

We see that you have received the accurate collateral value for 14th Jun 2023 as per the close price of your pledged securities on 13th June 2023.

However, we are checking with the concerned team regarding the display of the LTP of pledged securities on console and will get back to you shortly through the ticket you have created.

Just thinking out loud…

How about we have a user controlled liquidation priority order on existing positions in case of negative margin. Would that help?

For eg. in the positions screen the XYZ PE position I s the first priority to be closed, next would be ABC futures…

It would be the first step, then you could also add something like “entire position”, “till margin is 0/not negative “… other options.

This way user has a say in how liquidation happens.

Actually a good idea but implementing is going to be difficult.

Still not very clear on what are upfront and non-upfront margin shortfalls. As per this support article, if there’s any change in margin requirements post taking a position due to revision in SPAN+ Exposure, it’s an upfront margin shortfall and can’t be passed on to the customers. So interestingly, Zerodha is now charging penalties for the same under the ‘Delayed Payment Interest’ and the responses on support ticket are as usual, running around the bushes rather than answering the key question (Ticket # 20230907761453 - 11th Sep onwards).

I remember having a discussion with @nithin on another thread regarding auto square off of positions , where in he mentioned that since the upfront margin penalty cannot be passed on - the RMS team is forced to square off positions, sometimes within 5 mins of the margin call (apparently the conversation has been discreetly deleted, so replying here). The funny part here is, for the instance mentioned above, the margin shortfall was just 0.5% of the total margins and might thus have escaped the RMS square offs (only to be later charged as delayed payment interest). The very next week, the shortfall crossed 1%, and the RMS team promptly squared off my positions (on an expiry day for deep OTM contracts expiring in a few hours) - thereby making double brokerage and Call and Trade charges.

My only question here is - shouldn’t we expect some sort of consistency in the ways some of these penalties are being charged @nithin ? I’m willing to pay ‘delayed payment interest’ but then please do not randomly pick and auto square off my positions please!! Currently it’s heads you win, tails also you win.

I am guessing you have pledged stocks? This charge is when you don’t maintain at least 50% of positions taken in cash. @Kalpesh @Arockiya_Raja @MohammedFaisal can we check on this ticket?

All charges are rule-based and hence will be consistent. It is impossible to manually change rules across so many customers. Maybe your understanding of what penalty is for what isn’t right. Will ask someone to call and explain.

Square off of positions is done manually by the RMS team. This is discretionary, hence impossible to have consistency in terms of when or what we will square off if your accounts don’t have sufficient margins.

And this has been like that always for my account, with cash equivalent component always sufficiently higher than non-cash.

My available margins did go negative on these 2 occasions post entering the positions. But the point is either charge delayed payment interest or square off positions. But you can’t have it both ways. Will wait to hear back from the team.

Delayed payment interest would have been charged if you had sufficient margin in collateral and not in cash. In such a scenario, there won’t be any charge for squaring off. Also, this delayed payment is only for overnight positions.

The squaring-off charges are applicable only if the total margin in the account isn’t sufficient to hold the position.

Sorry, a bit confused but I think collateral (liquid funds) is as good as cash balance for shorting options, and to fulfil the 50% cash balance requirement.
As far as I’m concerned, the scenario’s was exactly the same (for charges on 8th Sep vs 14th Sep) wrt the shortfall. In the first case, I was allowed to carry the positions overnight and charged interest, while in the latter, positions were squared off. And am seeking clarity on this inconsistency, so that I can be mindful in the future.
And please don’t ruin your weekend over this, like I said I will wait for the team to check and respond.

@abcd5662 Getting this checked. Will have someone from our team reach out to you.