No additional intraday leverages from Aug 2021 in Indian capital markets

It will be norm with all brokers from sep1st.

@nithin @siva @ShubhS9
SEBI says Intraday margin will be VaR+ELM
But, why Zerodha calculates margin upon VaR+ELM+Adhoc margin?

I understand that now you take 50% of that…But after next year the margin will be huge
Ex :
In BPCl VaR+ELM is 24.98
But VaR+ELM+Adhoc is 44.02

Adhoc is temporary and should be collected upfront, it comes and goes, varies with each scrip, few won’t have it,anyhow minimum is 20% so one will get at least 5 times leverage irrespective of var+elm.

so we will get around 18x max leverage on reliance in September or 4.5x ?

5 times.

Then what is the point of the circular if it is not being done in phased manner? Phased implementation was to ensure not to shock the market with low liquidity from many retail traders opting out due to higher margins.

@siva Instead too many QnA. Why can’t your team arrange a quick tool? Calculator!

Phased manner was for peak margin system, not the new implementation of var+elm. Both are interconnected in a way but not the same, let’s see how it is handled

For cash, that was always expected to be around 4x with var+elm. Leverage for derivatives is done if there are no further changes (apart from what’s in-built like with Var+elm for cash)

Hi @siva, @nithin

Rasik_Mangla -> So why are the reducing the leverages for say reliance to 4.5x from September itself, why it is not reduced in a phased manner (say reliance with var+elm is 22%) it should be 18x -> 9x -> 6x -> 4.5x till august 21.

Winter_Soldier -> Then what is the point of the circular if it is not being done in phased manner? Phased implementation was to ensure not to shock the market with low liquidity from many retail traders opting out due to higher margins.

I think point made by Rasik_Mangla and Winter_Soldier are right. SEBI circular says, from Dec 1, need to collect at least 25% of VAR + ELM and from March 2021 need to collect at least 50% of VAR +ELM etc and from Sep 2021 it will be full VAR + ELM.

So, for intra-day trades why collect full VAR +ELM. The whole point of phased adoption falls apart. I remember in one of earlier posts, Nithin mentioning SEBI after consultation with brokers association went for phased adoption, so as to give time for people to adjust to new norms and not do it in hurried manner.

I think Sep 1, rule is for delivery based trades right ? This is mostly applicable to traditional brokers who took delivery based trades, without upfront margin from the client. This was never problem for new gen online brokers like Zerodha, as for delivery based trades, we always paid full money upfront.

You guys are our voice. It’s disheartening to see, you are interpreting circular in a way that effects retail traders negatively, instead of pushing back on this and implement rules from Dec 1.

Maybe you interpreted it wrongly, sebi clearly say the new rules for eq are from sep 1st, and upfront collection of margins is mandatory.
Peak margin is the one which has to be implemented from dec 1st for fno.

@siva after this rule is implemented do we have pay the full span+ exposure amount in currency future or can we pay 50%, 30% of the amout like we currently do?

You will have to pay full SPAN + Exposure for Currency F&O as well.

How much we have to pay as upfront margin for 1 lot banknifty fut , from September this year ?

From dec1st, full span+exposure.

No phased implementation that means,

So till dec 1st This year it will be same as now

Dec or October?

Oct reporting starts, dec actual penalty, maybe one of the above, we have time still to confirm.

@siva @nithin when are moving into new pledging system?

Likely from next monday.

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