I have a question regarding F&O margin requirements, and here are the known facts:
Regulatory margin requirements are sent around 5:30 pm, and clients must maintain these margins.
If there’s a margin shortfall, clients must add funds to cover it before 11:59 pm.
Failing to do so will result in Zerodha charging interest at a rate of 18% p.a.
If the margin shortfall isn’t resolved before the market opens the next day, regulatory penalties apply (0.5% / 1%).
Now, here are my queries:
I don’t receive margin shortfall notifications via email before 11:59 pm; I receive them the next day at 8 a.m.
Zerodha’s support team mentioned that since the regulatory file arrives around 5:30 pm, it might take time to update, so I should check the zeordha (kites) platform around 7 - 7:30 pm.
However, I encountered an issue where I checked after 11:45 pm, and the margin was available, but in the morning, I had a margin shortfall.( my account , my brother and my parents account).
Note : we do keep a buffer of post margin requirements. I do understand that there are chances for the shortfall.
But if we can know if we are still in shortfall before 11.59pm , we can save in paying the interest. Which is extra cost burden on us.
For overnight carried positions, BOD (Beginning of the Day) SPAN gets updated from exchange by midnight post 12am and it will get loaded into the system in the morning and in turn margin shortfall alerts are triggered in case of any shortfall in margin.
Since BOD SPAN comes in late night, uploading in to the system and triggering alert during that time is not feasible and also due to the end of the process running during that time.
Our support executive has replied with relevant link to refer as there was a peak margin shortfall which got captured by the clearing corporation (NSCCL) at random interval. But we don’t levy penalty on upfront margin shortfall as explained in the earlier reply, request you to please refer Can exiting one leg of a hedged position lead to a peak margin shortfall? for more details.
#20230921207479 - Checked ledger from January '23 till date, no delayed payment charges or penalty been charged.
#20230801750760 - This account got Delayed payment charges of Rs. 29.16 for July '23, will get the details by Tomorrow and will DM you.
If you could address the following concerns, it would greatly clarify matters:
You mentioned that margin requirements will be updated by 12 am. However, in case of a margin shortfall due to peak margin captcha imposed by the regulatory body, even if I square off my positions by the end of the day and have sufficient margin available, there is still a chance of receiving a provisional shortfall notification. If I maintain a balance that covers this, can I disregard such alerts?
Given that the margin update occurs after the 11:59 pm deadline, I may not be able to clear my shortfall before that time.
In the event of a shortfall, if I make the payment before the market opens, will I be charged interest on the shortfall? Conversely, if I make the payment after the market opens or am unable to do so, will this result in a margin shortfall penalty in addition to interest charges?
Since your system’s update process can be time-consuming, is there a way for us to directly obtain the required files from the regulatory authority to calculate margin requirements on our end?
I am just trying to find a solution, since due to sudden massive increase in margin requirements like yesterday from having positive 10 lakhs to negative 9 lakhs margin requirements. In one of my account, similar has happened in other accounts also.
Fortunately, I had that much amount in my bank, to clear of the margin shortfall below the market opening. Which will lead to only interest amount.
If not I would have suffered a huge blow of penalty of 1% plus interest ( plus gst) .
Trying to find a way, cannot be lucky like always, if I can atleast find it before hand then atleast I will have time to arrange for money. Since arranging fund in last second will be tough.
No because SPAN files have risk parameters and those are converted to margin values through the algo by vendors/brokers and even clearing corporation at their end. As mentioned in earlier reply, BOD SPAN comes post 12am from exchange and even if we want to load into system, need to run EOD/BOD process, upload positions and then load the BOD SPAN, send alerts which is not feasible as well as convenient. As we always suggest user to keep excess margin to avoid any square off from our RMS department.
Since you have already raised the ticket, will get someone from concerned dept. to speak and clarify to you if you still have any doubts.
Hey, sorry if I’ve been repetitive with my questions. Let’s clarify one last time: What are the margin requirements I need to maintain in this scenario?
Scenario:
During the day, I take a position of 100 lots of Nifty options with a margin requirement of 1 lakh per lot (assuming). This results in an initial margin requirement of 1 crore.
Since there are margin fluctuations during the day, the margin requirements increase to 1.1 lakh per lot. Therefore, the peak margin requirement becomes 100 * 1.1 = 1.1 crore.
At the end of the day, I have 50 lots, and the margin required per lot is 1.1 lakhs. Consequently, the end-of-day margin requirement is 50 * 1.1 lakhs = 55 lakhs.
So, by 11:59 pm, what should be the margin requirements for ?
In the above scenario, you need to have total required margin (as per EOD SPAN file + Exposure) is 55L which needs to be available. In case of collateral, you need to maintain 50% of total required margin i.e., 55L * 50% = 27.5L should be in cash component (Liquid cash or cash equivalent collateral like Liquid bees, G-Sec, etc.) and rest can be in non- cash collateral. In case of non-fulfillment of cash component, there will be interest charges applied on shortfall.
For ex: You have cash of 10L and collateral of 2Cr. as per your example, you need to maintain 27.5L in cash component whereas you are short by 17.5L which will be funded by the broker so there will be interest on 17.5L.
With respect to interest of margin shortfall should be calculated as per the EOD ( END OF THE DAY ) right
" The exchanges release margin files several times a day, with the final file published at 5:30 PM reflecting any movement in the stock during market close hours. The End of Day (EOD) file is updated accordingly with the latest margins. The displayed margin requirement on Kite is based on the most recent exchange file available, meaning it can change after market hours based on the EOD file."
So the interest that is charged in my account is it due the pre market opening shortfall?? Which is updated after 12am.
Because we have checked the kite platform every day 11.45 pm for shortfall.
The shortfall which you see next day could be increase in margin as per BOD (Beginning of the Day) Span file and there might be difference between previous day’s EOD Span file vs Next day’s BOD Span file since parameters differ in both of these files.
As mentioned earlier, we don’t pass on upfront margin penalty to clients in case of any shortfall but we notify through IVR/Email and with regards to interest, it will be charges only if you didn’t maintain 50% of total margin required in cash or cash equivalent where broker end up funding it.