No more than margin required at beginning of the day.
Okay so let me try to understand this using few scenarios
Magin utlised in the morning: 9lakhs
Funds available: 1lakh
No new positions taken during he day
During the day total margjn required goes to 11lakhs.
Shortfall 1lakh.
Result: No margin penalty.
No open positons
Cash available 10lakhs
When I take position margin required 9lakhs.
For the same positions if they were open before the start ot trading session was 11lakhs
After the positions were taken margin increased to 12lakhs
Shortfall 2lakhs
Result: peak margin penalty on 2 lakhs.
No open positons
Cash available 10lakhs
When I take position margin required 9lakhs.
For the same positions if they were open before the start ot trading session was 11lakhs
After the positions were taken margin dropped to 8lakhs
Shortfall NIL
Result: No Penalty.
No open positons
Cash available 10lakhs
When I take position margin required 9lakhs.
For the same positions if they were open before the start ot trading session was 11lakhs
After the positions were taken margin increased to 10.5lakhs
Shortfall 50k
Result: peak margin penalty on 50k
Can you clarify if my understanding is right. If this is right then I will understand combination of open and new positions also.
Going through all the material below , Peak margin penalty transferring to Client is not legit . Its only EOD margin can be liable for penalty . “The client needs to fund their account before 11.59 PM to avoid paying the peak margin penalty”. Its clearly mention in RTIs and cases that Brokers should give sufficient time and constant communications or even RMS should square off . Many brokers are levying random penalties without any proof is a ‘Day light Robbery’
- Another SCAM by Brokers (I was charged ₹9.5 LAKHS) + Post Market Report 01-Apr - YouTube
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TRUTH Behind 50% Cash Margin & Peak Margin Penalty - BROKER SCAM Part 2 - YouTube
Information related to Peak margin Penalty: 1. TRUTH Behind 50% Cash Margin & Peak Margin Penalty - BROKER SCAM Part 2 - YouTube ( watch from: 4:33 to 13:04) , 2. FAQ: https://www1.nseindia.com/membership/resources/download/faq_mrg_collection_reporting.pdf 3.SEBI Cases against broker: https://www.sebi.gov.in/enforcement/orders/dec-2021/appeal-no-4529-of-2021-filed-by-gowrishankar-s_54616.html,https://www.sebi.gov.in/sebi_data/attachdocs/dec-2017/1514550695322.pdf
I even don’t understand what SEBI wants, they have finished intraday margins then why they have 4 times a day margin updates that too randomly. Now they will remove it on 1st Aug. So even removing some clause takes 3- 4 months !!!
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Zerodha have started blocking 3-4% extra, so probably Kotak is only blocking the mandated margin, or not blocking extra upto the extent Zerodha is doing…
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Hi @viswaram, apologies for delayed response. As @SachinSingh pointed out, we block 3-4% additional margin. You can refer to this post for more information.
temporarily thats okay. how do i write to NSE on this matter?
if brokers keep the margins higher fearing peak margin penalty the customers end up losing trades.
NSE should do away with peak margin issue or end up relaxing the margin requirements for intraday.
in the last 1 to 2 years the qty i could sell on margin has declined by 40%
i now need to find double risk reward trade opportunity to make the same money
what’s the point in NSE saying its to save the traders when he is compelled to risk double his money to make the same gain?
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Exactly.
I’ll be losing out much much more due to this extra blocking of margin than by paying any sort of peak margin penalty.
Sebi Scores
@ShubhS9 can you get somebody from NSE active on tradingqna ?
@SachinSingh - i will raise the scores complaint soon, couple of existing complaints are pending redressal - let that get sorted out first.
Is this part of a co-ordinated push to encourage people to reduce trading (on margin) ? 
Sir they earn intrest on margin kept by us with them samje sir conflict of intrest hai.after sebi mandated to settle clients funds they have resorted to this cheap technique
hmm… cheap technique? Have you read this post & my comments above on why we have to charge a slightly higher margin to avoid penalties that will make the business unviable otherwise?
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What happened with margin penalties & hence a slight increase in margins from brokers is collateral damage & it wasn’t intended, I guess. I don’t know if you have checked this post, but it talks about when there was a push from regulators to increase.
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i have read the article and a query remains.
are there any participant in the market like the institution desk or a direct broker who is at advantage here?
CME maintains 25% margin, SEBi mandates 100 plus other addons.
if this rule is not relaxed to FIIs, why the… would they trade in India if they can get more than 4 times leverage in their home market?
@nithin one question still remains unanswered( peak margin penalty clubbed with upfront requirement). why does SEBI put the onus of intraday margin shortfall on the broker? it does not allow it to be passed on to client. where as EOD margins penalty is passed on.
this is because you interact with them directly.
just like EoD and T+1 time, an hours’ time can be given to fulfill shortfall until next snapshot etc.
@nithin some more questions still remain.
- why we are being made to pay higher brokerage of Rs. 40 during account turning negative when zerodha itself is blocking 4-5% extra margin. Suppose I have Rs. 50 Lakh n account and carrying positions on which exchange mandated margin is Rs. 49 Lakh but zerodha will be blocking 50.5 - 51 Lakh and account will turn into negative to the tune of Rs. 50 thousand -1 Lakh and I am forced to cut down my position and pay extra brokerage despite my account having sufficient margin as per exchange requirements . Is it another way of shoring up revenue indirectly in the garb of keeping business viable ??
- brokerage @ Rs. 40 is being charged on negative margins in opaque manner. In multiple accounts of me and my family, higher brokerage has been charged inspite of me exiting positions to bring account to positive. Why then higher brokerage has been charged for subsequent transactions after account turning positive. Higher brokerage is only during period when account remains in negative. I have not raised ticket because of small amount involved but what matters to me is how it has been programmed into software for calculating brokerage. I think either there is bug in the system on how to calculate brokerage or it has been deliberately left there so that zerodha gets to keep higher brokerage. In case a customer points out charging of higher brokerage after going through lengthy harrowing process of resolution through ticket, zerodha refunds extra brokerage and for rest of the gullible customers, it keeps extra unethically charged brokerage in its pockets because not all of the customers will raise tickets for refund of small amount. but small amounts from lakhs of customer means huge amount of money for zerodha. Another way to increase revenue purportedly to keep business viable
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Calling it a “cheap technique” was maybe not the best choice of words but he/she does have a point.
I like to utilise my full margin for overnight trades & for my current account size, appx 8L extra is being blocked, which even at a conservative 1% per month, gives 96k per year. So, I’m losing out on that amount & you’re able to earn appx 20k on it (taking 2.5% per annum bank rate). -
Is there actually provision in the rules for brokers blocking extra margin or is this one of those grey areas? Concept of ad-hoc margins is there but that’s usually there for stocks or it can be applied for derivatives as well?
this is grey area for me. please explain how the broker gets interest of the amount parked by the customer?
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suppose you deposit Rs. 104 with broker and take a position for which exchange stipulates margin of Rs. 100. Then Zerodha is supposed to deposit 100 to exchange from its bank account however due to blocking 4-5% extra margin, zerodha still has Rs. 4 surplus (free float) in its bank account on which it will earn interest.
This is news for me. i personally dont think brokers are holding the customer’s balance in their bank account - if that was the case then there is a bank risk element to it.
Also i dont believe brokers are not depositing the money to the exchange for each position - i think its only a virtual block & an agreement to settle. Thats why we have the counterparty risk to begin with.
Who could clarify on this?