No additional intraday leverages from Aug 2021 in Indian capital markets

Yeah, when trading stocks, you will still get leverage but only to the extent of VAR+ELM. So yeah, 4.5 times for Reliance.

trade 1L of Reliance sharesā€¦ means 1 LOT of reliance in equity!!>?

1L means, 1 lakhs worth of Reliance shares.

1Lac it is. 100000 worth of shares if you want to buy/Short, VAR + ELM is 22% so youā€™ll need 22000 to trade 100000 Rupees worth of shares of Reliance.

And thatā€™s for INTRADAY.

ok got it

I think now the broker leverage margining system should change to Buying power (till there is leverage.) I.E if one has 5 lakhs in his/her account, they can trade upto 20L if thereā€™s 4x leverage. When and if it finally goes away, thatā€™s the end.

so now today ril closed @1920. so to trade ril, worth 1 lakh, @1920, i can take 52 shares in equity intraday with minimum of 22k margin in my account for taking the trade!! m i right?

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@nithin is SEBI asking to discontinue intraday trading? Margin not allowed by Augā€™21, means the same right?

Yeah, why so much confusion on this :slight_smile:

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Yes ā€¦ tht too in aug 2021 ā€¦ abhi will remain 9x

They are not discontinuing intraday trading. They are just saying that to trade intraday, everyone needs to have SPAN+Exposure for Derivatives, and VAR+ELM for stocks before taking a trade.

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@nithin Sir, What about realized profits. Many option buyers deploy a strategy called pyramiding, wherein they continue to deploy the realized profits to buy cheaper ATM, OTM options after squaring off current position. Gives tremendous returns in case of trending markets. Brokers used to allow them considering hte fact that realized profits will anyways be credited in account next day. Now will taht have to stop as well.
Same query regarding realized profits from trading other segments like Cash, Futures, Options.
Thanks.

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@nitin so what i understood is lets take for Nifty intraday option selling or even future trade the max margin any broker can allowed based on current SPAN+Exposure will be around 5x ?

So what Zerodha providing now 4.16x is what will continue post Aug 2021 ?

Even today realized intraday profits (futures or options) canā€™t be used to take overnight positions. If you end up taking, there will be margin penalty as position taken using unrealized credit.

But with the new circular, you will not be able to use it even on an intraday basis.

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Okay , what do you think will it have effect on capital markets in long run . Will it do good to market or bad or no change.

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@nithin
How about brokers lending money for clients at .05% a day to compensate for the lost leverage in FnO? feasible?

is SPAN+Exposure / VAR+ELM is equivalent of total contract value / Cash Value?
Do we get any margin benefit post Augā€™21?

Hi Nithin,

If I understood you correctly then whatever the Zerodha Margin calculator shows as ā€œTotal margin requiredā€ under NRML for trading naked Futures will be required for both Intraday as well as swing tradingā€¦is that correct?

Nifty margin currently

From Aug 2021 this entire 17.91% will be required for intraday trade as well.

Until then, I guess until Dec 2020 nothing changes. Post that every 3 months, intraday leverages keep reducing. And post Aug 2021, everything goes away.

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Most probably Bank brokers will come up with NBFCs that will ā€œonlineā€ grant loan in the morning and will revert it back by 4 pm. It will be given at 0% intrerest rate.