NSE Circular: Updated margin penalty guidelines

[Sanjukumar.K]

Hey @SachinSingh

Before I begin to answer your specific question. Here is the brief about changes we did w.r.t EOD margin effective Nov 14th.

The NSE publishes two margin values for clients’ end-of-day (EOD) positions: the beginning-of-day (BOD) span margin parameters and the EOD span margin parameters. The BOD margin is primarily used for margin reporting and allocation, with EOD penalties being calculated based on these values. In contrast, the EOD margin reflects the actual margin charged for open positions at the end of the day. EOD margins may be higher than BOD margins due to increased volatility but can also be lower with decreased volatility.

Here is the full explanation of both of these margins.

Why are BOD margins considered on trading platforms instead of latest SPAN margins?

SEBI introduced peak margin penalty in 2020 to ensure no additional intraday leverage could be provided in F&O, and leverage would be capped at 5x while trading equity. This penalty was implemented in phases and fully implemented by September 2021. The exchange would randomly capture five snapshots of a trader’s open positions throughout the trading day, and a peak margin penalty would apply if the required margin exceeded the available margin. Ensuring sufficient margin is present is straightf…

On Kite, we show BOD margins so that margin collection for the trade follows the exchange reporting and no penalties are levied.

@SachinSingh

@VenuMadhav, wanted to know what has changed regarding the way EOD margin is calculated from 13th onwards? For 13th & 14th, I actually have two different Margin Statements. For 13th, the Margin Statement received through email & for 14th, the one I’d downloaded through Console that particular day, both show different EOD value to the one if I were to download it through Console today.

Before November 14th, we blocked margin values on the ledger and margin statement based on the EOD span parameter released by the exchange. However, when BOD margins exceeded EOD margins, it led to a shortfall in upfront margins and penalties if the client took payouts of freed funds. This issue could have been avoided by retaining BOD margins before processing payouts.

Just to illustrate this with an example:

Say Customer A holds a Nifty Future position, with the following margins:

BOD file Margins:

Span: 75K
Exposure: 30K
Total: 105K
Margin Available: 110K, leaving Free Funds of 5K

EOD (actual) Margins:

Span: 72K
Exposure: 28K
Total: 100K

Margin Available: 110K, leaving Free Funds of 10K

For margin collection and reporting, the BOD margin of 105K is considered. Previously, we charged 100K in the ledger and margin statement, which left 10K available for the client to withdraw, potentially causing a shortfall and penalty in reported margins for EOD positions.

To address this, we now charge the higher of the BOD and EOD margins on the client ledger and in margin statements. So, in the new system, it will show the EOD margin required as 105K.

@SachinSingh

For 13th November, I’m posting the two EOD Margin figures from one Zerodha account. This issue is there for other dates & other accounts too.

Since we updated the system for displaying new margin values in margin statements, any margin statement generated for older dates on the Console will now reflect margins based on the new system.

Does this affect your trading the next day?

The answer is NO. Kite will show margins based on the actual margins charged for your positions.

We’ll check the feasibility of showing both margins to the clients, as it may help them understand the change in margin from BOD to EOD, and we will also create a support article explaining this.