How does the latest SEBI circular about margin requirements affect me?


#64

Hi

Please see this earlier reply by @nithin.

Does it still hold true?

To rephrase it again, if one has a negative MTM today and one sells liquidbees today to offset it, will it affect one’s margin requirements (for other open positions) in any way?

Thanks


#65

Yes still holds true. You can sell liquid bees to make up for the loss .


Selling holdings to cover MTM Losses
#66

Blockquote However, for the sake of margin reporting, we don’t consider profits made since they’re realized on T+1 day.

In case it was a 10k mtm loss instead of profit. Would the available margin for today still be 1Lac (since MTM has to hit the ledger on T+1 and not T)?

Or will my available margin for today be 90k?

Thanks


#67

@nithin
How come my open futures position is squared off yestetday even if I have balance more than span margin. I lost a huge amount due to this action.
I get to know about the new SEBI circular from zerodha through message which came after a gap of 6 hrs of squarring off by RMS team. I didn’t get any email or message regarding this ciruclar prior to july2 . Information through email should be provided before hand. Just putting in website and tradingqa doesn’t mean everyone read that. An simple email regarding zerodha new margin requirements would have been more than suffice .This was really an awful experience with zerodha. You guys really handled it badly. I lost huge potential profit due to this unexpected squared off.


#69

We have sent email on this already a few weeks back.


#70

Hi Nithin, I have read the chain above but there is one query…

Now when new circular is effective from today (2nd July), will i be able to short in nifty at the same old price of appx 50000/- or will i be paying more than 50K…

Also i was able to write 10 lots so far in say 5L of total margin available with me, will i be able to short same 10 lots now in 5L…? in case i start paying more after this circular can i assume that my earning would be less as number of lots would decrease with high margin requirement…


#71

Can check this to know how much margin is required.

Along with above one can also assume losses will be reduced with this, as leverage is double edged sword.


#72

@nithin Check again sir, I am 100% sure that I never received any email regarding this and that is why I feel cheated. Here’s my client id-DS9402.

I am hoping that Zerodha has a specific grievance cell that can follow up this issue wholeheartedly.
Thank you


#73

Can check your registered mail ID, can also check spam. We have also flashed message on kite.

Answer is little subjective, Span is a system which calculates margin requirement at portfolio level to cover losses with 99.7 probability that can happen over 1 day timeframe. It consider various scenarios of changing price and volatility and conclude at “largest reasonable loss” that can happen over 1 day. So, this varies dynamically with changes in price and volatility through out the day.

Exposure is just a fixed set percentage on contract value, this is as a second layer check to keep losses under control in case span margin is breached, till now SEBI has given option on levying it but now considering the leverage, volatility etc it has made it compulsory to maintain it.

I personally believe if one has good trading system this leverage restriction is beneficial to them in long term as leverage is double edged sword and returns are not sustainable using higher leverage alone.


#74

@siva @nithin

As you can see in the attachment, I got an email regarding this circular from zerodha on 29 may and there it was mentioned that SEBI has mandated to comply with this form 1 jun,2018. However, there was no mention of NSE notice(Circular Ref. No: 62/2018) which say that said changes will be effective from July 2, 2018. I checked all my mail, even recovered ones that might have been deleted(recovery is possible in outlook email platform), but believe me there was no communication from zerodha on this. The last mail I received was on 29 may, 2018(attached picture).

All I am saying if there was any kind of change in the SEBI circular which in fact was with the notice of NSE( Circular Ref. No: 62/2018), it is the duty of the brokerage firm to inform the members and that has blatantly violated in this case. I have done my homework and even recheck it, I request you to follow up this case as I haven’t received any positive response from Zerodha’s support portal @nithin


#75

Sorry for your loss mate … But I don’t think I get your side of the story correctly.

You were informed about the change on 29-May-2018. So, as per the last information you had, the changes were effective 01-Jun-2018. By that logic, shouldn’t you be ready for it on 01-Jun-2018 itself and not fret about it on 02-Jul-2018 which is 1 month down the line? Right? Also, I am pretty sure you would have got a 100% margin utilisation email/sms which should have been a red flag to take action.

I know it for I am also impacted by the same circular … and will have a to do a lot of work on my strategies to fine tune and absorb these changes in leverage taking capacity.

Anyhow, my 2 cents - Move on …


#76

By how much your money was short when square off happened ?
SPAN+Exposure is needed. Not just span.


#77


Hi Nitin, During the day time the value of margin was 84000/- for 1 lot of the same contract…so really not getting the right answer as the same margin calculator showing 2 very very different values of margins of 50K and 84K at 2 different times. pl help.


#78

The margin required to trade a lot of Nifty 10200PE is around 50k. The margin required will remain the same throughout the day unless the exchange increases margin required which can happen in the case of excessive volatility.

The margin required to trade the 11200 strikes is around 84K, guess you might have had a typo.


#80

Consider the following scenario :

I have got 1.3+ lakh collateral margin due to liquidbees. I sell 2 NIFTY options . I have some 10-20 K cash margins for MTM.

Suppose i need to reposition my options leg, I buy these 2 options back and sell other strike 2 Options ,

Will I be charged for short penalty as the realization of trade is T+1 but I did both close and open of positions in same day.

Please note that I am doing all these via collateral margin.


#81

Liquidbees used to be T+2 settlement as far as I know. Has anything changed recently to make it T+1 now?

Thanks

(Sorry to be bothering you but I couldn’t find the settlement details regarding Liquidbees anywhere on the exchages website or tradingqna etc)


#82

My bad, corrected it. It is T+2 itself. What I meant to say is that if you sell stocks to cover the MTM, when reporting margins to the exchange, it is good enough.


#83

Hi

Is the Additional Surveillance Margin of 20% / 17.74% (long / short position) also applicable to Zerodha clients?

NSE circular reference link https://www.nseindia.com/content/circulars/CMPT38123.pdf

If yes, is it already added in the zerodha margin calculator tool?

Also, when will it be added to the Daily Margin Statements?

Thanks


#84

Yes, it will be if that scenario happens. But 1st let us discuss that scenario.
It is a hypothetical case which says all the stocks and Index plunge by 20% in one day, not applicable if few stocks corrected by 20%, literally at-least 2/3rd of stocks should fall by 20% in one day as mentioned in scenario one.
Then after considering span and exposure if any client is loosing more than 1 cr and carrying positions for next trading day(T+1), in that case this ASM will come in to effect. Can take this as black swan event.

As this is hypothetical case, it is not applicable to be added in margin calculator.

If this case happen and client falls under any mentioned scenario in that instance it will be added.


#85

Hi All,

For options writing, in case the cash in my account falls below the SPAN + Exposure requirement, but is still above the SPAN requirement, will RMS square off my short option position immediately, or will I have time till the end of the day to square off my positions, without paying penalty ?

I would prefer to square off my positions manually as far as possible.