How to avoid quarterly settlement to have funds for intraday trading?

General
23

Means cash balance + collateral margin are looked as one whole sum rather than differently.

NSE’s rules are to retain 125% of cash balance used and upto 2.25 times the margins used.

Taking your example of 8 lakhs margin + 2 lakhs cash this both are seen as one amount of 10 lakhs during Quarterly Settlement.

What this means is, even if you use only 8 lakhs of margin on overnight trade and not use any cash, by applying NSE’s rule to retain 2.25 times the margin used, broker can retain upto 18 lakhs, since this amount is greater than your account balance of 10 lakhs (8 lakhs margin + 2 lakhs cash) broker can retain 2 lakhs cash as well, even if you haven’t used it.

Now say you had 20 lakhs of funds instead of 10 lakhs, by above-given logic broker will retain 18 lakhs and 2 lakhs worth of excess funds will be transferred back to your bank or shares worth that much will be unpledged and sent to your Demat account.

Hope you understood.

1 Like
24

In your example:
Cash: 2L
Collateral: 8L
Total account value = 10L

Margin blocked = 8L
Exchange allows broker to retain 2.25 times the margin blocked.
8*2.25 = 18L, whereas your account value itself is 10L. So the account is deemed settled and no payout of funds/securities happens.

If Account value was 20L, instead of 10L, the excess is 2L (20-18); 2 lacs worth securities would be transferred back to your account.

4 Likes
25

Any work around for intra day traders?

2 Likes
26

No workaround.

27

Thank you.

28

Can I hold Future contract to avoid this.

29

You can. If you hold any open F&O position, an additional 125% margin can be blocked, and any balance amount will be sent to your bank account. Can check this post for more details.

30

I already read this in support page. I just want to make clear

125% additional margin means

If I have 1L worth of future contract and 125000 in cash.

My funds will not automatically transfer to bank account. Right ?

Next settlement is from 11 Jun to 18 Jun.

If I hold Future contract till 14 Jun. Will my account settle between 14 to 18 ?

31

@VenuMadhav @ShubhS9
Does the margin used intraday also count or does it need to be overnight margin?

32

You need to use funds for overnight position.

33

I am new to market. As the market was at all time high at that time i kept my cash in trading account and was planning to take new positions when the market goes down. But all my funds transferred to bank account without any notice due to quarterly settlement rule by sebi. do i need to pay for income tax?

Second problem i am facing now is I am forced to enter some trades to avoid quarterly settlement but now the market went down and i don’t have any money to average or to take any new position.

34

This is actually ridiculous.

Can you provide a button which says that ‘Don’t transfer my money back?’

1 Like
35

It is SEBI’s order. No one can circumvent this.

36

This is client’s money. They should have a choice.

37

I am simply saying that a broker can’t do anything about that. If someone want then should raise the matter with SEBI.

38

Hi @ShubhS9 ,

I was holding overnight positions, the 225% of the postion was way higher than my available cash, but still almost the entire amount was transferred to my bank.

So if I have cash of 100 and 225% of Open F&O position is 150, there should be no payout. In my case I got a payout of 100 making my opening cash balance as -ve.

Can you check if this was a error in calculation or has the logic changed?

1 Like
39

For account related queries, would suggest you create a ticket at support.zerodha.com team will have this checked and assist.

40

To avoid quarterly settlement, you can buy liquid bees with all extra money before the due date of settlement.

41

I think to prevent such a type of settlement, you can use all your extra money in any investment such as buying liquid bees, etc., before the time of settlements. This will be advantageous.

1 Like
42

Very good idea to avail funds for intraday trading. You can use your remaining extra money in any investment in ETFs before the completion of the settlement period.