New Running Account Settlement Rule - Single day for clients of all stockbrokers in India

[GB26]

Yes only 80%, but the remaining 20% will be available the very next day.

For me, this was what I could come up with, so chose this.

[tradersmantra]

There must be a rule for instant withdrawal because it’s not done on same day .
If facility of instant fund adding is available then why not for withdraw.

[GB26]

Instant fund adding is happening from our side, our banks, so I think the technical pressure is on our banks, as as we all use different banks, the pressure is distributed.

Instant withdrawal means there could be some pressure on brokers along with banks, and may be brokers’ systems cannot handle such pressure, lacs of such redemption requests at the same time.

There could be some regulatory restrictions too.

[orion591]

Do all banks have transaction limit of 10Lakh? I remember adding 20L in a day to one of my trading accounts last week.

[Anon0]

Which bank is it?

[Anon0]

Can I add back the money on a Saturday or Sunday?

[Tony_Davis]

money was sent on friday and I added back yesterday, now again today it has been transferred back…

[Dilips]

2 questions:
Q1) What was the rule of settlement before this?
Q2) Since Zerodha has more than a million customers - the only option is to create software to do the settlements. In simple language - will the unused fund’s settlements be done by software after doing all the calculations as mentioned above or will be manually done?

Not very important but still relevant question - Today (08-Oct-22, time 10.35 am) I am seeing 112 rs unused in my Demat not settled. Its ok I do not have a problem with that but technically why it’s still there?

[J_R_Dinesh]

Yes all major banks have which bank r u using

[nithin]

@Dilips

2 questions:
Q1) What was the rule of settlement before this?

Not very important but still relevant question - Today (08-Oct-22, time 10.35 am) I am seeing 112 rs unused in my Demat not settled. Its ok I do not have a problem with that but technically why it’s still there?

I had posted this on twitter

https://twitter.com/Nithin0dha/status/1578238205388025856

Some clarifications.
AS until now was spread across a quarter, now brokers will do it the first Friday of every quarter for all customers.
Customers should have funds in the bank by Sat/Sun, so it can be brought in by Monday, so there isn’t going to be any trade disruption.

AS was done only for inactive customers (not traded for 30 days), but now once a quarter, any unused funds on the first Friday (over & above 225% of the margin used) must be transferred back.
This is painful for the broker but regulatorily is right to test the system.

@Dilips

Q2) Since Zerodha has more than a million customers - the only option is to create software to do the settlements. In simple language - will the unused fund’s settlements be done by software after doing all the calculations as mentioned above or will be manually done?

10 million customers Everything is done by software with manual reconciliations.

@Dilips

Not very important but still relevant question - Today (08-Oct-22, time 10.35 am) I am seeing 112 rs unused in my Demat not settled. Its ok I do not have a problem with that but technically why it’s still there?

It could be an unsettled amount, profits from a trade, unsettled credit from a sale transaction, etc. You can create a ticket to get a specific answer.

[nithin]

@J_R_Dinesh

This is going to create so much problems. Banks have transaction limit of 10 lakh per day… so we can’t transfer our funds fully if our trading capital is more than this. Can’t imagine how ppl with 50lakh+ are going to manage this every quater. Any ideas

You can request banks to increase fund withdrawal limits to certain bank accounts. Our larger customers send large values of funds.

[nithin]

@Chirag1

@nithin Time to promote HDFCBANK eCMS
Unlike payment gateway settlement systems, there’s instant update if i’m not wrong.

Ah no, doesn’t really help in this case.

[nithin]

@tradersmantra

There must be a rule for instant withdrawal because it’s not done on same day .
If facility of instant fund adding is available then why not for withdraw.

I will create a detailed post explaining this. @Meher_Smaran maybe create another question on Tradingqna and tag me there. Keep it unlisted, I will answer and list it.

But the gist

1. If you transfer funds using a payment gateway, the broker doesn’t get it the same day; it is usually the next day. So while you get money to trade instantly, the money isn’t with the broker. So allowing withdrawal is an issue.

2. Fund withdrawal is the riskiest part of the broking business. A wrong withdrawal, and there is no way to get back the funds. Hence, most brokers have reconciliation systems built in to determine whether customers withdrawing funds have their own clear funds. Also, when withdrawal happens, the money has to be reduced from the risk management systems, which is also slightly risky. But that said, this risk is large when the requested funds are large. We are working on instant withdrawal for smaller amounts of money, to begin with, up to Rs 25k.

There are a few other reasons, I will try to create a post on this soon.

[Patani]

@nithin 3 questions that is in the best interest of both Zerodha and any customer

1. Considering sebi rule implemented on Oct7 2022 - If I sell shares worth 50k and buy shares worth 50k on Oct - do I have to load funds for 50k.SInce what I sold on Friday (Oct 7) will take T+2 to get settled.

2. Will there be any fine if I wait for T+2 days without loading funds? ask I sold for 50k and bought for 50k

3. If I do fund transfer of 50k using net banking tomorrow - I can start using the funds from T+1?

[nithin]

@Patani

• Considering sebi rule implemented on Oct7 2022 - If I sell shares worth 50k and buy shares worth 50k on Oct - do I have to load funds for 50k.SInce what I sold on Friday (Oct 7) will take T+2 to get settled.
• Will there be any fine if I wait for T+2 days without loading funds? ask I sold for 50k and bought for 50k

If you sell shares worth Rs 50k, the platform will allow you to buy only up to Rs 40k. A 20% margin gets blocked for the sell transaction until the shares are delivered.
If you buy Rs 40k worth of stocks without the funds being realized, the broker’s capital will get used for this. If a broker doesn’t have deep enough pockets based on the size of the business, the broker may not allow new purchases until T+2, when funds are settled.

@Patani

If I do fund transfer of 50k using net banking tomorrow - I can start using the funds from T+1?

At Zerodha, for the top 5 banks, we have built the gateway ourselves, so the funds get settled immediately to us. Since we get funds instantly, you can use them instantly.

For all the banks, we don’t have the gateway built ourselves; we use a 3rd party payment gateway, and they will settle the funds on T+1. If you transfer Rs 50k on Monday, we will receive it on Tuesday. If you use the funds on Monday to trade, the broker needs to have deep enough pockets as his own capital will get blocked for this trade. Since we are sufficiently capitalized and for almost over 80% of transactions, we have our own gateway, our customers will be able to trade instantly even for all the 3rd party payment gateway transactions.

Btw, you will probably see the industry not allowing funds to be used on the same day of fund transfer through the gateway starting Feb 2023 when the next bunch of regulations come into play, which will take up the working capital requirement for a broker significantly.

We should even at that time be okay to continue offering the same user experience as today.

[Meher_Smaran]

@nithin

maybe create another question on Tradingqna and tag me there

Will do, Boss

[darshan_prakash]

Funds on my trading account has been removed as it says “funds transferred back as part of quarterly settlement”. But the money still has not been credited to my bank account. But the funds from my trading account has been removed and says that its already sent to your bank account. Is this normal? Will it take a day or two to be credited to my bank account.

[nithin]

@darshan_prakash

Funds on my trading account has been removed as it says “funds transferred back as part of quarterly settlement”. But the money still has not been credited to my bank account. But the funds from my trading account has been removed and says that its already sent to your bank account. Is this normal? Will it take a day or two to be credited to my bank account.

The banks are clogged today due to a large number of payout requests. You should have the funds latest by the end of the day and worst case by tomorrow.

[samurai]

I traded yesterday. It was with a very small percentage of my total capital so no chances of margin penalty. Today after quaterly settlement the daily margin statement is showing a negative value. So i need to bring that money in by monday, right?

[Stonecold]

@nithin

Btw, you will probably see the industry not allowing funds to be used on the same day of fund transfer through the gateway starting Feb 2023 when the next bunch of regulations come into play, which will take up the working capital requirement for a broker significantly.

What about UPI Payment or IMPS/Neft ?