Peak margin requirements from Dec 1st 2020 & its effects

This is something only SEBI can answer :slightly_smiling_face:

What is this about… please explain

Can an example provided for cash segment changes if i want to trade reliance one lakh with leverage intraday

Earlier was …

and now… till feb? and till may?

How much is the peak margin penalty?is there are a warning system in place?

If we sell shares from demat and receive only 80 % of shares sold will it reflect in the margin as 80 % of amount or full 100 % amount …received.?

Will i get the rest 20 % amount the next day or day after?

In March due to excessive volatility SEBI had increased margins for non-F&O stocks, which they have now withdrawn. It is old article, these changes have been explained here: Update on SEBI's covid regulatory measure brought in March 2020

Earlier brokers could give leverage as high as 30x or 40x, now from December 1st, this will be capped and will reduce in phased manner as explained belwo:

From December - February: Max leverage of 5% or 20 times for stocks.
From March - May: Max leverage of 10% or 10 times for stocks.
From June - August: Max leverage of 15% or around 7 times for stocks.
From September 2021: Max leverage of 20% or 5 times for stocks.

The penalty is same as which exchange levies for shortfall in margins for overnight positions, you can learn more here.

Only 80% will reflect in your account balance, remaining 20% will be available from the next day.

Yeah, in our list of things.

You can now see the 20% margin blocked from the sale of your holdings in the Delivery Margin section on both Kite Web and Kite Mobile. For more information, you can refer to this post.

Assume you have sold 50 shares of ZEEL at Rs 211.15. The value of holdings sold is Rs 10557.50 i.e. 50 x 211.15 (ignoring charges).

Out of the Rs 10557.50, 80% credit (i.e. Rs. 8446) is available as a negative balance under the used margin field. You can use this negative used margin for other trades. The balance 20% credit (i.e. Rs. 2111.50) is blocked under the delivery margin field as shown below:

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Does Peak margin rules affect BTST trades i.e -i have bought say Rs. 50,000 worth of shares today can i sell it tomorrow?

Will i need to have additional 20 % in my account to sell i,e–Rs-10,000?

No changes, you can continue to do BTST.

You don’t need additional margins to sell the shares, when you exit your position 20% of the sale proceeds will be blocked for the day, the remaining 80% will be available immediately which you can use for trading.

@ShubhS9 @siva, if our margin goes negative intra day, like by mistake close long options/fut in our hedges by mistake, what will happen? Sometimes, this happens by mistake and then forces us to close our short position, but can take couple of minutes. I am hopeful SEBI understands that these trading issues can happen.

You have a point but there’s no alternative to this. It is better to be cautious from now on and make it a good habit to first exit the position with margin and then exit the hedge.

this needs to be raised to SEBI, while not to give leverage above a certain extend or number is okay.
SEBI should and can verify whether its member broker has the right technology to implement their mandate/rule. There needs to be certifications, which from my past interaction with SEC team and trading equity flows at world’s top bulge bracket bank , I have seen these rules being verified and certified. Failure in not doing so will have very high penalty and it is imposed on the business providers like investment banks /brokers/ Asset managers, not to clients.

Current rule from what i understand is extremely ridiculous and seems is not well thought. If I exit from my spread (SEBI wants us to first go for a spread in first place) position, by mistake exit my long position first and short later, penalties will kill us.

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Dear @nithin , how NEW PEAK MARGIN impact ‘open f&o positions’ of last two days of expiry(i.e Wednesday and Thursday), as you know the same is shoots up in last two days(in case of stocks).

Till now, we can provide the same even in evening of Wednesday.

After this(pick margin rule), whether we have to provide the same, before opening of market on Wednesday.

Thanks

Dear @ShubhS9 , @nithin , @VenuMadhav ,

Thanks for your reply,

Actually my question is regarding stock f&o AND RELATED WITH LAST TWO DAYS OF EXPIRY MONTH THAT IS WEDNESDAY AND THURSDAY, whereas normally margin just doubled.

Thanks

Dear @ShubhS9 , @nithin , @VenuMadhav

But your Zerodha trading platform provide the increased margin requirement on WEDNESDAY morning after opening of market.

How one can know, how much additional margin required ?, SO ONE CAN TRANSFERRED REQUIRED CASH FROM THERE BANK ACCOUNT TO TRADING ACCOUNT.

Thanks

On last wednesday and thursday of every month we at Zerodha ask more margin, this will not come under Peak margin. So, one can close positions on wednesday or transfer accordingly to not have positions closed from our end or face interest penalty but those additional won’t come under peak margin.

Suppose I place order for share X

buy 100 shares at 100 and sell 100 shares at 105.

If order does not fulfilled. Its okay if I cancel any order first. Or I have to cancel any particular order first ?

Or this hedge position rule does not apply to intraday equity.

One should do things to understand, you can try doing it by placing some limit orders with 1 quantity, any how limit orders, so won’t execute.