You’re right. We notified users early to bring in additional funds for the short option positions they have to avoid square offs/getting penalty charged.
So, just to confirm, closing positions during the first couple of minutes of market open will be safe? The first of the 5 random margin snapshots by the clearing corporation doesn’t get taken in the first couple of minutes of market opening?
Also, in case this causes a short-margin penalty, would it be considered an upfront margin penalty or non-upfront penalty?
1 Like
@Ragavendran_M could you please help me understand this scenario:
- I created a buy order hedge and then a sell order leg.
- On trying to close both the positions, I closed the sell order first and then closed the buy order option position. But since the sell order was placed at market(not limit), still Zerodha sent margin shortfall notice to me instantly.
- I did not place any new order for the entire day and closed all my positions. Evening I received margin shortfall message for the above 2nd point.
But since I dont have any positions and the complete Funds is restored, do I still need to add the shortfall margin funds?
Yes it has to be added. If exchange taken the screenshot at the time of hedge break there is a possibility of margin penalty.
1 Like
But this was not a hedge break. To be honest am not sure why this shortfall even occurred. I had funds before closing the position, on closing also I closed the sell option order and then buy option order(that is how I can avoid the peak penalty). Still shortfall is happening.
There’s a margin call email triggered everytime I close my positions even without breaking hedge, since several years now. I haven’t been charged any margin penalty so far. It’s just a fake email, not sure why Zerodha doesn’t correct the logic of sending these emails.
This email should only be sent when actual margin needs to be added and not when it’s not needed. But it’s Zerodha so don’t expect any action.
2 Likes
@Ragavendran_M in @Aman_Pandey case how come margin shortfall happen when he closed the sell order first and then the buy order option?
as you dont send proof of snapshot (time when it’s taken).
obviously it create doubt that you guys are using peak margin penalty as excuse to commit fraud 
1 Like
I very well agree, @jugador . It’s very confusing to the point that we just dont know how to close positions. Even limit or market order creates a shortfall.
I have replied based on general case of margin shortfall alert. DM your id we can check what exactly happened in your account tomorrow.
1 Like
This should not happen, as mentioned by Ragavendran you can DM your ID to him, he can get it checked. Email comes only in case of closing hedge break leg with out additional money.
We have cross-checked. This is not a case of hedge break.
You have a hedge position of put long and short, where the margin has been blocked for the overall portfolio level. If you try to close the position say placing a buy order for your sell position, the premium (buy value of the option) will be blocked on top of the margin blocked.
Example—You have a cash margin of 10 lakhs. The Margin blocked at the portfolio level is 9.8 lakhs. Now, you are placing an exit buy order with a value of 50k. The margin blocked will be 10.30 lakhs (9.8 lakh + 50k), which led to a shortfall of 30k.
Hence the margin increased which led to the trigger of a shortfall alert. Once the buy order is completed, the margin will be automatically reduced. In this case, there won’t be any penalty.
1 Like
Thank you, @Ragavendran_M for your kind help in making me understand. So the margin shortfall was happening because of buy order to close the position. Clearly understood now. And as you said since the order is closed immediately, the fund is restored and nothing to worry then of the penalty few days later, correct?
Yes, its correct.
1 Like
Example—You have a cash margin of 10 lakhs. The Margin blocked at the portfolio level is 9.8 lakhs. Now, you are placing an exit buy order with a value of 50k. The margin blocked will be 10.30 lakhs (9.8 lakh + 50k), which led to a shortfall of 30k.
Now you mean to say margin increased shortfall alert will trigger for placing exit buy order.Irrespective of it executed or not.
margin shortfall for placing order not for hedge break, how logical is that?
Hi @VenuMadhav,
Thanks for asking your support team to look into the ticket #20241125814765
But, unfortunately the resolution of it has still not come. It has been over a month since I opened this ticket, while some details were shared after your intervention. Further issues/questions related to the details led to no response/we are investigating.
For the last 3 weeks the only response that I’m getting every week is that we are still checking the details and will get back (with no date being given).
How long does the support team expect the customer to wait while the details are being checked (it’s been over 3 weeks)?
There needs to be a faster and better resolution of queries rather than the endless we are looking response each week.
Kindly request you to expediate the resolution
@Meher_Smaran @VenuMadhav
Thanks for asking someone to look into this, but the issue is that it ends up with the same customer care and he is giving me the same response. He seemed to understand the issue about a month back but now it seems like he has decided (or has been instructed) that he needs to close the ticket and has closed off his ears and mind. Inspite of all my points and observations/issues/gap in his logic, he is just copy pasting the same generic response/rule and trying to close the issue.
Can you please ask some other customer care executive or someone senior to look into the issue. This has dragged on for close to 1.5 month.
Hoping that we can do better and get this closed with some logical reasons/answers (similar to way zerodha has done for me for the last 5 years).
Happy to get on a call again and help get this closed with a logical solution.
Repasting the ticket number for ease # 20241125814765
Hello sir,
Our team has already responded to your query through the ticket you raised, but I’m sharing the details here again for everyone’s understanding.
Regarding the indicative peak snapshot time shown in the margin statement:
As the term suggests, the time provided is indicative and not the exact timing of the peak snapshot. This is because the peak margin concept was introduced to ensure margin availability in clients’ accounts. The Clearing Corporation (CC) takes four random snapshots during the day, and even brokers are not informed about the exact timing. The highest margin requirement across these snapshots is considered the margin requirement for the day.
By the EOD, we receive files from the exchange containing only the margin requirement details for when the snapshots were taken. These files do not include the specific times at which the snapshots occurred.
To help clients, we provide an indicative timing for when the snapshot might have been taken. This is meant to give you a rough idea of when your margin requirements could have increased. While it is not mandatory for us to provide this information by exchange, we do so to assist our clients by offering as much transparency as possible.
Additionally, we send provisional shortfall emails if there is a margin shortfall in your account. This allows you to add funds and avoid penalties. Margin calls are also sent whenever there are spikes in margin requirements.
Please check this article to know more about the margin penalty.
We hope this explanation clarifies your query.
Hi Jyoti,
Agree with the point mentioned around the peak snapshot rule you have mentioned. The exchange snapshot (shared by you) shows the time of the snapshot to be 1519/1520, but there were no trades taken by me around those timelines (already shared the trade book on the ticket).
Also in the earlier support messages, the trades highlighted by the support team were not able to identify the margin shortfall due to trade being taken by client. Let me also add, that just looking at a few hedge trades in isolation does not make sense, as closing out some other position (Other instrument/index) can open up margin, which would allow me to close out hedges without going into a shortfall.
Also, as per the rules the shortfall penalty can only be transferred to the client if the same is account of some trade taken by the client (which does not seem to the case here) and not on account of margin increase intraday (post initiation of trade) or due to market movements.
Also, the point mentioned about provisional shortfall email does not apply to this case, as the increase in margin was due to increase in post market close. In addition, the point of funding the account does not apply to my case, as the positions were all OTM options which were expiring the same day. Hence, post the overnight refresh the positions expired, and the margin funding was not needed. This can be verified by looking at my account’s opening positions the next day opening.
While I agree to the points you are making, these are generic rules which don’t apply to my current case. This is exactly my point, that I’m getting generic answers which would be correct in 90 or 95% of the cases, but my valid in my current case.