Peak Margin Penalty by SEBI

I have a question regarding peak margin penalty. I used to place spread order through basket order and at the time of exit , I exit all , covering my sell leg first then selling my buy leg .
Inspite of that i used to to get email from Zerodha " EQUITY margin utilisation for … has reached …% of available balance. Add funds immediately on Positions can be squared off if margins are insufficient. Team Zerodha" .
Why there are sending such mail when I squared off all my position at one go by clicking exit all and i always keep sell leg first to be squared off. Will I face any penalty from SEBI regarding peak margin rule. I never carry any overnight position exceeding the limit. pls guide.

I guess, you might have placed the sell orders first but did you verify if they executed before squaring up the buy order. I don’t see any other reason

At the time of fresh trade i always place buy trade first then sell trade and at the time of square off I place sell leg first and the buy leg so that sell leg should be squared off first. it is not possible to verify which leg executed first because there may be time gap of few seconds . But I am getting mail when I am going to execute EXIT ALL. My question is will i face any penalty for such excess margin utilization just for few seconds ? OR penalty relates to excess margin utilisation relating to overnight position. kindly clarify.

Tradebook will tell you the exact time of execution. Regarding the charges, I am not very sure.

If the exchange takes the snapshot at that very moment you will get shortfall penalty.
Best to create two baskets order for exiting. Execute the sell leg first. Once the trades are completed then send the other basket with buy legs or can also use the exit all choice.

but should send buy square off orders only once your shorts are closed
as placing order does not guarantee execution order.

Then it is better not to use : EXIT ALL" option , because there may be a chance that sell order exectuted before buy order. It is better to cover one by one i.e First cover sold legs and the cover buy legs.


Yes, but if that is too tedious, make a basket for all the short legs and execute at one go.
Post this is done you can use exit all for you long positions

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Thanks prateek for your in detail reply, however if, as per your view , I create a basket to cover my existing trade , then there may be another margin issue , will zerodha consider this basket as square off trade and execute it without additional margin OR will ask for same margin as original trade ?

Zerodha is super smart, the minute you put your order it well know if well square of the existing position and not block extra margin.

In the basket order these is a option to choose include existing position. Choose that and you will know if extra margin would need blocked

Thanks lot :blush:

When u r saying exit sell first and buy later, is there not a manual gap of few seconds created. I have seen BN take off like mad rocket in seconds, will hedging be able to work this way that we exit sell leg and the buy remains without protection for that time till exit.
Better would be to use sensibull I guess. Another expense.