Margin: Peak Vs Short

What’s the difference between Peak Margin Penalty and Short Margin Penalty , Eg how is it applied?

Peak margin penalty is applicable for shortfall in margin during trading hours, while short margin penalty is applicable for shortfall in margin for overnight positions. The rate at which the penalty is applicable is same in both cases, explained here.

In a scenario where there is both peak margin shortfall and shortfall in margin for overnight positions. The penalty is applicable on highest of the two shortfalls.


@ShubhS9 - Do Zerodha charge for peak margin penalty (intraday negative balance) provided at day end positions are squared off to make net account balance positive?

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There can be.

Take this scenario for example. You’ve 100 in your account and took positions with this, as margins are dynamic and change according to volatility and price. If during trading hours, margin requirement increases to 110, at the end of the day you’ll only have 100 to report against this. So, on the 10, exchange will charge short margin penalty.

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Take this scenario -

In morning I have 100 in Zerodha acccount, took a f&o position for 100 bucks. Now remaining account balance is Zero. During the day, due to dynamic margin pricing account balance become -10. And before end of the market closing, at 3:15 pm I square-off my f&o position and account balance becomes 100 again.

Will I be charged peak margin penalty for -10 balance?

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Yeah, you can be charged penalty.

@siva only if the nse takes a snapshot , right?

Yeah, but no point taking that chance.

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I thing cc takes random snapshots four times,correct?
Secondly how it had worked till now was that if we deposited funds till night in our accounts ,we wouldn’t have faced penalty. Even some mid level brokers accepted pre dated cheques so as to report full margin to exchange. So will this arrangement work now too.

Also @siva when you have EQUITY margin utilization call, Zerodha gives some time to add funds (What’s the max time available?) @ShubhS9

so does NSE ask brokers to charge penalty every time or is there any automated system with broker which deducts penalty from user account?

Lets say this is the scenario
Initial fund 3000rs ,
I sold 133000rs holding, (20% blocked=26000), Remaining 107000rs.
I took position for 97000rs in F&O
squared up position in f&o with profit. Never did account go in loss or negative fundbalance.
i Bought back 107000rs holding back.

I will be charged penalty because

  1. Because i bought back shares which i sold and had used same for intraday margin.
  2. if i had not bought back the shares there would be no penalty.

Hi, @ShubhS9 @siva
In the above picture
What is 10% applicable margin? what if short collection is more than 1 lakh?

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If 1 lakh is the margin and if you are short by 5k penalty is .5% but if required is 1 lakh and short by 20k then as it is more than 10% of total margin required you will be charged 1% penalty even though overall short is lower than 1 lakh.

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Hi @ShubhS9 @siva @Prayag
Margin available 1L (50k cash and 50k collateral)

After taking intraday position
margin available 30 k
Cash available -3k

Any penalty?

There won’t be any margin penalty as there is sufficient margin available in your account.

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Hi @ShubhS9 , @siva

Lets say I have open 16500ce open position and Margin available is 50k,
and i enter limit or SL order which is pending and Margin available is -40K

Is there any Penalty?

No penalty if order are in pending state, only on completed orders.


Now the most popular question?

With freak trade if you had sold the call option and no SL order entered. With sudden increase in price will short margin penalty be applied?

Yes if screenshot was taken at that exact moment that goes to SEBI.

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But shouldn’t peak margin be applicable on margin shortfall itself? If there are losses due to fluctuations, then that loss hasn’t actually crystalized. Due to risk management by brokers, real time unrealised loss will be deducted from free margin for safety purpose but that loss doesn’t actually exist yet. If the day closes, then your loss will crystallize and if there’s a shortfall then, penalty will be applicable on the shortfall. Need clarification @siva @ShubhS9.