Peak margin requirements from Dec 1st 2020 & its effects

[r95990]

@nithin !
This is a serious issue and your involvement is required!

Hope this is taken up with SEBI and the Exchanges. This has become a regular practice by the exchanges.

Is this some kind of modus operandi to increase IPF ?

[siva-reddy]

@SachinSingh

the overnight margin requirement changes have been a real problem lately, more than usual.
Earlier, I used to keep around 2.5 L free cash and overnight, there used to be a change of around 20-30k, max 70k maybe, which is fine. But now, overnight changes of around 1L is a usual occurrence. In fact, on Tuesday I’d kept around 4.5L at closing, which decreased to 2.2L, and yesterday kept the same amount (4.5L), but it increased to 6.4L. Both days, same type of trades and almost same cash left overnight. But one day, it decreased by around 2L, and yesterday, it increased by same amount!?
It’d be great if we could get a fair margin requirement around EOD. Bit of fluctuation is fine, but too much these days…

Can you message me your ID, and also mention the date.

[siva-reddy]

@r95990

I face this quite often and mostly on Wednesday EOD.
Yesterday my margin was -56,000 as per margin statement and today morning kite showed a negative balance of 5 lakhs. I don’t understand what changes happened overnight, that too before the market opened.

Can you message me your ID,please?

[r95990]

My id’s DS3169 ; AG9307. AG9307 id is charged penalty every Wednesday EOD.

[SachinSingh]

Messaged you, though I’m not sure that would solve much. Since this particular thing happened recently, so I remembered, otherwise this issue has been going for quite a while, once such instance I’d pointed out earlier as well:

Now see margin requirements on the Kite order window

a) Yup, the margins change way too much post-market these days. Last month, I’d kept 2L post market on 13th, then during the night it changed to around 70k, and then the next morning, it showed a shortfall of 10k. I immediately covered it, but got charged a penalty (not a big amount but still). Another thing was that the margin penalty appeared on my ledger a week later and not the next day or day after. I think Siva had mentioned sometime back that the exchange was a bit late sending the margin…

Unless we get to a stage where the margin requirement files get updated around 3:20 or something (so that trader can make required changes if needed), this will keep happening.

[pankushri]

where do you check the penalty? I can not see in my statements.

[siva-reddy]

@SachinSingh

Unless we get to a stage where the margin requirement files get updated around 3:20 or something (so that trader can make required changes if needed), this will keep happening.

Yeah, no easy solution for this as I know. But we will try to approach exchanges on possibility of moving 2.30 file to 3 or 3.10, lets see.

[r95990]

Check your ledger statement in console with the narration as mentioned below…

NSE F&O short-margin penalty for date 2021-XX-XX

Margin penalty will be debited on / around 7 days from the date of default as per my experience.

[r95990]

@siva-reddy But how do you explain the logic of margin increase from EOD to BOD. Does that have any logic??

[siva-reddy]

@r95990

But how do you explain the logic of margin increase from EOD to BOD. Does that have any logic??

As said 2.30 span and 5.30 span can have difference, on kite till market close margin blocked will be based on 2.30 file but process will happen based on 6 pm file.

[r95990]

@siva-reddy You are not getting me. My final EOD file margin(not the 3:00 or 3:30 or 5:30) was -50000 and the next day 8:00 am margin is -500000/-.

Was the market having some midnight session and suddenly the VIX rose up?

[siva-reddy]

@r95990

-50000 and the next day 8:00 am margin is -500000/-.

This should not happen, can you give ID and mention date, please.

[hiren_parekh]

@siva-reddy
yesterday @713-714 rs copper margin was 90,000/- and how today its 96,785/- @676 rs copper
strange
NRML margin shows 1,86,125/- so 50% MIS should be 93,063

[siva-reddy]

@hiren_parekh

yesterday @713-714 rs copper margin was 90,000/- and how today its 96,785/- @676 rs copper

Depends on volatility also.

@hiren_parekh

NRML margin shows 1,86,125/- so 50% MIS should be 93,063

We charge 52% of nrml so even if there is some change to span during intraday it will act as buffer.

[Ajmal]

If I sell and buy the same shares, will I need to pay a penalty if all of my orders are CNC?

This is the sequence of events:

1. I don’t have any funds as margin
2. I have 100 shares of A in my DEMAT account. I sold them at Rs. 500 each. I got 80% of sale proceeds as margin, which is 40,000
3. I bought 80 shares of A at Rs. 500 using 40,000 margin
4. Now, Zerodha treats this situation as if I have sold 20 shares of A since I have re-purchased 80 of the 100 shares that I sold. And it shows a margin of 8,000, which is 80% of the value of 20 shares that Zerodha considers that I have currently sold.
5. With the 8,000 margin, I bought 16 shares of A at Rs. 500.
6. Now Zerodha assumes that I have sold 4 shares of A because I have re-purchased 96 shares. It shows a margin of 1600. With that margin, I bought 3 more shares of A at Rs. 500.
7. Zerodha thinks I have sold just 1 share, and gives me Rs. 400 as margin. I added Rs. 100 to my funds and then I purchased one more share of A at Rs. 500.
8. Now I have sold and re-purchased all the shares that I had.

Am I violating peak margin requirement in this case? My reading of This article by @nithin is that I will have to pay a penalty. Please clarify.

[ShubhS9]

If you’ve no funds in your account and sell shares from the holdings, you’ll be only able to buy back 80% of the shares since you’ve funds only to purchase that many. The remaining 20% you can use only from the next day onwards, not on the same day.

Penalty can arise if you use the proceeds received to do intraday trades or trade in F&O and buy back the sold shares.

[Ajmal]

@ShubhS9 specifically for the sequence of steps that I mentioned above, and assuming that I have not done any other trades, will I be charged a peak margin penalty?

[ShubhS9]

@Ajmal

specifically for the sequence of steps that I mentioned above, and assuming that I have not done any other trades, will I be charged a peak margin penalty?

As mentioned above:

If you’ve no funds in your account and sell shares from the holdings, you’ll be only able to buy back 80% of the shares since you’ve funds only to purchase that many. The remaining 20% you can use only from the next day onwards, not on the same day.

There won’t be penalty if you buy back the shares you’ve sold.

[AmitUM]

@nithin @siva-reddy @ShubhS9 Will the peak margin penalty apply in the situation described below?

1. I have sold options on stocks and these need to be settled by physical delivery.
2. On the Wednesday before the monthly expiry, the margin on stock options increases significantly, resulting in a margin shortfall at market open.
3. During the day, I go about adding more capital to fund the additional margin requirement and/or square off some positions to reduce the required margin, to make sure that there is no longer a margin shortfall in my account at the time of market close.

Does the peak margin penalty apply in this situation? In other words, is there a possibility of penalty getting levied on the amount of margin shortfall at market open on the last Wednesday before monthly expiry owing to the increased margin requirement on stock options?

[ShubhS9]

@AmitUM

is there a possibility of penalty getting levied on the amount of margin shortfall at market open on the last Wednesday before monthly expiry owing to the increased margin requirement on stock options?

The additional margin required on last two days of expiry will not come under Peak Margin. You 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.