NSE Circular on Short margin penalty refund

[Pai]

@M2U

I have exactly same situation and I have raised ticket #20220809832147

Will have this checked and arrange for our Support team to call you tomorrow for this query.

Please refer to this circular from NSE that clarifies your query on upfront and non-front penalty.

INSP49929.pdf

In case of failure (requirement not met by the client) on part of the client resulting which penalty is levied by the Clearing Corporation on the member for short reporting of margins other than “upfront margins” such as consolidated crystallized obligation, Delivery margins, other margins (Mark-to-market & additional margins), member may pass on the actual penalty to the client.

Will ask our team to help with any other queries you have on the refunds that was processed.

[M2U]

Thanks for your reply. I would like to understand under what circumstances @Nithin’s comment " “as per current regulations it (penalty on this EOD margin shortfall) can’t be passed on to client” is applicable?

[M2U]

Thanks for your reply. I would like to understand under what circumstances @Nithin’s comment " “as per current regulations it (penalty on this EOD margin shortfall) can’t be passed on to client” is applicable?

[vikramaditya]

NSE Circular on Short margin penalty refund

Sharing something we had written for internal use. I will put a detailed blog on this. Circular is applicable for both cash and FO. But in cash there is never any margin penalty issue as the margin is a fixed 20% for intraday and for overnight anyways full money is collected. What are the examples of upfront penalty? We do not allow clients to enter positions without upfront margins collected. However, there are instances where the upfront margin required increases intraday due to the follow…

Answer found here i guess

[M2U]

@nithin : Can you please ask your team to refund the penalty based on your statement “As per the current regulations, it can’t be passed.”, since I have exactly same situation as explained by Ashok Bansal. As previously stated, my ticket # is 20220809832147. I would appreciate your intervention, as the ticket is pending since last 4 months.

[nithin]

@M2U

@nithin : Can you please ask your team to refund the penalty based on your statement “As per the current regulations, it can’t be passed.”, since I have exactly same situation as explained by Ashok Bansal. As previously stated, my ticket # is 20220809832147. I would appreciate your intervention, as the ticket is pending since last 4 months.

Our team mentioned that the penalty you have is a non-upfront penalty, and this is passed to the customer, as explained in the post above.

@Ananth can you check on this?

[Ananth]

Checked and DM to client with details.

[M2U]

@nithin : Thanks for your reply. Your team had initially categorized the penalty as “Short Margin Penalty”. After raising ticket # 20220809832147 on Aug 9th, they re-categorized it as EOD penalty on Sept. 1, which is exactly like what Ashok Bansal had described to you on Oct. 3.

Oct 3

[quote=“ashok_bansal, post:99, topic:136203”]
Consider someone has call option selling position held overnight. During intraday, margins were maintained well above margin requirement. But due to volatility, margin increases at end of day (EOD) leading to considerable margin shortfall on EOD basis.

> Will penalty on this EOD margin shortfall be taken by zerodha or passed on to client??
[/quote]

@nithin wrote: As per the current regulations, it can’t be passed. So essentially brokers will be forced to square off positions where margins have gone up quite a bit.

I have exactly same situation, as asked by Ashok Bansal. Here is a snippet from my ticket, a response from your team member Syed:

Sep 01, 2022 17:58 Syed

Thank you for writing to Zerodha.

We apologise for the delayed response.

We see that we have checked the margin penalty for the above dates and amount.

NSE F&O short-margin penalty for date 2021-09-21 EOD 36072.13

Please check the ticket and response from Syed on 1st Sept. to verify this.

Therefore, as per your above mentioned response to Ashok Bansal, please ask your team to refund the penalty without any further delay. They have already tried many times (since Sept. 1st) to evade paying the refund by various means and arguments and changing penalty definitions from time to time just to suit their purpose.

Your intervention is highly appreciated. Let the sanity and honesty prevail.

[Ananth]

Hi @M2U

As per SEBI guidelines, Exchanges and respective clearing corporation (CC’s) have implemented Peak margin in phrased manner i.e., Dec 2020 to Sept 2021 to go fully live on peak margin (More details: Peak margin requirements from Dec 1st 2020 & its effects).

Before the peak margin introduction, there was no restrictions on intraday leverage offered across segments by brokers, no criteria of broker- baring the penalty, etc. (Can find the info here: https://www1.nseindia.com/products/content/derivatives/equities/penalties.htm).

After October 11th 2021, the upfront margin shortfall i.e., short collection of SPAN + Exposure margin due to any reasons during the intraday as well as for EOD has to be borne by broker. Circular reference : https://archives.nseindia.com/content/circulars/INSP53525.pdf

In your case, you mentioned the penalty as on 21.09.2021 which is before this guidelines come into effect which has to be borne by client and we had refunded the upfront margin shortfall penalty post October 11th, 2021. Also, we completely stop passing the upfront penalty from August 2022.

[M2U]

Dear @nithin

Thanks for your intervention.

(1) As per your previous post your team mentioned that it is non-upfront penalty.
(2) Mr. Ananth has sent circular which is applicable to upfront penalty.
(3) Mr Syed from your team has categorized it as “EOD” penalty on Sept 1st.

Do you see a pattern here?

As I mentioned in my previous post your team is "trying to evade paying the penalty refund by various means and arguments and changing penalty definitions from time to time just to suit their purpose."

Do I need to elaborate more?

[Ananth]

1. No changes to non-upfront penalty i.e., shortfall in mark to market (MTM), delivery margin, etc. apart from SPAN + Exposure. It means brokers were and can still pass on this penalty to clients.

2. EOD penalty is part of Upfront and it is been refunded post Oct. 11th, 2021.

P.S. I have DM you the details and tried reaching you Yesterday to clarify on these points but calls went attended, will give a try again.

[M2U]

@nithin

Please ask your team to stop this charade of lies and jugglery of words just for a few bucks which would be thousand times less than peanuts for a organization like yours. Please ask them to refund the unjust and unfair penalty,

Let the honesty and sanity prevail.

[M2U]

@nithin : Can you please tell your team to refund the penalty? It has been pending since more than 4 months.

Let the honesty and sanity prevail.

[M2U]

@nithin : Thank you very much for your intervention. Your team has refunded the short margin penalty. I appreciate your help. This certainly solidifies my faith in you.

Interesting part is they are still withholding GST and not willing to refund it unlike it was done for the earlier refund of short margin penalty. Wonder why.

Once again, thanks for your intervention.

[Jason_Castelino]

Actually gst cannot be refunded. I do not know how they had refunded earlier.
I even asked about it once.

@Jason_Castelino

But I do not understand as to how you were able to reverse GST amount. You can’t pass a credit note after 6 months. Anyways. May be I am missing something.

@ShubhS9

Will check and and get back to you on this.

I never got an answer here.
But since it didn’t affect me in anyway I didn’t follow up.

[M2U]

@nithin : Your team has still not refunded the penalty amount charged to me, completely. The gentleman Mr. Ananth you referred to in your post, doesn’t have a common curtsey to respond. It has been many weeks and months and yet there is no complete resolution.

[ShubhS9]

@M2U

@nithin : Your team has still not refunded the penalty amount charged to me, completely. The gentleman Mr. Ananth you referred to in your post, doesn’t have a common curtsey to respond. It has been many weeks and months and yet there is no complete resolution.

Hi @M2U, sorry to hear this. Our team has proceeded the refund and will reach out to you shortly.

[Abhiteja_Pachipulusu]

I have an existing strangle position in Reliance yesterday (Expiry - 1 day). No shortfall in margin and no auto square off and no MTM loss.
But today (expiry day) morning I have received shortfall of funds message. I have immediately squared off within 15min of market opening. No funds were added.
Will there be a non upfront margin penalty?

[Meher_Smaran]

Only bringing in the exchange stipulated shortfall amount helps one avoid non-upfront penalty shortfall, Abhiteja.

You can refer to this post for more information on non-upfront penalties

NSE Circular on Short margin penalty refund

Sharing something we had written for internal use. I will put a detailed blog on this. Circular is applicable for both cash and FO. But in cash there is never any margin penalty issue as the margin is a fixed 20% for intraday and for overnight anyways full money is collected. What are the examples of upfront penalty? We do not allow clients to enter positions without upfront margins collected. However, there are instances where the upfront margin required increases intraday due to the follow…

[Abhiteja_Pachipulusu]

So, will I get penalized? Why should one get penalized when I am no longer in the position as I reach peak margin