So an FD is created using client funds and pledge with clearing corporation. This way brokers earn float and all the funds overnight sits with clearing house.
Basically there is no risk of funds misuse. After new upstreaming rules. Brokers should do payout same day as they can’t keep idle funds. Is system changes made
Can u tell this…sebi started new upstreaming rule to be followed in July 1st.
SEBI had issued this circular ^ in which it was stipulated that unpaid securities be pledged to the Client Unpaid Securities Pledge Account (CUSPA) for 5 days, and if the client doesn’t bring in the funds, the securities be disposed off to recover debit. Manu seems to be referring to the provisions of this specific circular.
However, I don’t think the intent of this circular is to offer T+5 funding 
Yes…it’s this. I think it’s loophole. I pledge my shares to get margin. I buy shares and within t+4 days I send money to meet the margin.
What I understand is its an regulatory loophole. As only var margin to be collected and then brokers should report client shortages on t+5 days. So brokers give time till t+5.
I’m i correct for this.
You’re right. As I’ve said earlier, I don’t think it’s regulatory intent to offer T+5 funding using this route. We will not be able to provide such a facility at Zerodha for now.
I’m only waiting for MTF. I buy short term in zerodha and long term in other broker to segregation of shares for long term capital gains due to fifo.
Also
I buy reliance share for rs1000 say 10 shares to keep for long term like years and years
Then there is sudden short term opportunity in reliance at price rs1500. After rs1500 rose to rs1750. I sell it, due to fifo. Rs1000 will be sold now. So long term capital gains will be calculated from rs1500 when I sell reliance say 5 years later.
I can buy pase fifo by having two demat account. This is regulatory loophole right and income tax loophole
This is not regulatory loophole. That was the intent.
FIFO system was introduced, because there is no way to say which shares you sold, unlike physical certificates. So, they needed to sort this issue of which shares are sold. They introduced FIFO because of this reason because there is no better way.
In two different demat, this issue doesn’t arise, so that is perfectly fine. If they wanted, they could have made FIFO global instead of per demat, but they didn’t purposefully, for obvious reason.
I sometimes sort this issue of capital gain by transferring longterm shares to different demat account, then sell, then bring back old shares. That way you can sell later bought shares. Completely okay according to IT circular.
kindly link the source/circular
Read this thread —
it contains circular too.
thanks. How come they’ve not updated anything in that thread? Z team seems to have been tagged in it.
Chirag, FIFO is applicable on demat account basis. So, you need to pay capital gains in this case.
For transferred shares, the FIFO logic is slightly tricky.
I really want to keep one demat account.
But now I have to keep two
One for long term,
Other I use apps like liquide, stratzy etc to buy short term. But if I find the shares good i use my other demat account to buy the same for year’s of long term.
I had short term tata motors 3 times. And also has tata motors for long term
They can create a block chain…with one share as block like e ruppe and each demat like walllet.
So entry to of each share with its own share number from one wallet to another will be entered in system.
Also under this system. When one party buys shares and I sold it to him in bse…BSE send the details to cdsl instanous with order I’d, trade no and etc and counter party details. Clearing will do direct settlement without need of pooling accounts.
Sorry that I didn’t put this in peoper way. I can explain more better.
At age of AI and advance software. Need for manual tranfer can be moved away. Like zerodha has to process files etc
I didn’t understand this sir.
For transferred shares, the FIFO logic is slightly tricky.
We’re making the changes to accommodate FIFO logic for off market transfers. Any exit before transfer date won’t be matched with the discrepant buy entry transferred shares. We’'ll update once it is live.
This part. Can I have more explanation.
At present I have two demat accounts to avoid fifo. High volume trades for short term zerodha. Long term fo years another demat. This is only solution to come up
As per IT rules, FIFO rules for P&L calculation is applicable on the demat account level. So, if you want to maintain two portfolios, i.e. one for short-term trading and another for long-term holdings, you need to do it by opening two separate demat accounts.
Say you brought RIL on 1st April 2023 and sold it on 1st May 2023 in the Zerodha demat account. If you have been holding RIL shares in another demat account with XYZ broker for the last five years and choose to transfer shares from XYZ to Zerodha demat on 1st June 2023, you’ll be asked to update the buy details for the transferred stocks on Console. If you update the buy date to five years ago, as per FIFO, your sale on 1st May 2023 will be matched against this and shown as long-term gains in the Tax p&L report. We’re modifying our logic to ensure this doesn’t happen.
Understood and thanks for info.
One more doubt.say I invest in smallcase, liquid and stratzy. Which is linked with zerodha.
I got an smallcase which had reliance.
Now in stratzy, I buy reliance and sell it after 15 days as short term.
Then I sell smallcase after 1 year.
As FIFO, the one I sell in stratzy will be reliance I got from small case . So there is profit calculation error in stratzy as it will not know I got stock in small case, it will only think I sold reliance got from stratzy.
How do want to tackle this error problem. True profits I can see in console. But stratzy will continue to show wrong profits. This will be big problem when investors use multiple third party apps.
And then they will complain of frauds who don’t any FIFO
Only the broker would have all the transaction details to give correct reports as per FIFO, those reports should be verified before filing ITR. Third-party (stratzy) with no direct access to all the transactions, cannot handle your case.