Quarterly settlement issue

[samsingh]

Hi,

I do option selling and utilise 30% of funds only. Rest I keep free funds as margin of ruin. What do I do to avoid quarterly settlement ? Invest 30 % in liquid fund ?
Account size is suppose 10 lakhs. I use 3 lakhs as margin. Will 7 lakhs entirely be credited to my bank account ?

[TheGouda]

@samsingh

Account size is suppose 10 lakhs. I use 3 lakhs as margin. Will 7 lakhs entirely be credited to my bank account ?

Brokers can retain up to 225% of the margin required under the regulations. In your case, 225% of 3L, i.e., 6.75L, is retained, and the rest has to be paid out. Rs 2.25L can be invested in liquid funds if you don’t want the payout.

[SachinSingh]

In case of pledged collateral, the rule where 50% of the margin required is retained first in cash form still applicable?

a) Assume 35L collateral, 2.5L cash & 5L margin blocked at EOD on Friday. First 2.5L cash (50% of margin blocked) gets retained. Since 225% of margin blocked (6.125L) is allowed to be retained, the rest 3.625L comes from collateral, hence in this scenario, no payout occurs.

b) Assume 35L collateral, 2.5L cash but only 4L margin is blocked this time at EOD on Friday. First 2L (50% of margin blocked) gets retained. Since 225% of margin blocked (4.9L) is allowed to be retained, the rest 2.9L comes from collateral, and payout of remaining cash (50k) occurs.

Am I understanding both scenarios correctly?

[SachinSingh]

@TheGouda @siva ?

[bharat1080]

how to switch to monthly settlement ?

[TheGouda]

The required margin to be maintained is 50:50 in cash and collateral. While retaining 225% for quarterly settlement, 50% is retained in cash and the remaining upto 175% can come in the form of collateral. If there’s no 175% collateral, can fallback to retain from cash. Read more

[TheGouda]

@bharat1080

how to switch to monthly settlement ?

Please contact support here to change your settlement preference.

[SachinSingh]

@TheGouda

50% is retained in collateral and remaining upto 175% in cash.

In the link you shared, it says 50% is retained in cash, and not collateral.

Also, this query was raised in an earlier thread, where a reply by another Zerodha member is along the same lines as the two scenarios I raised earlier…

New Running Account Settlement Rule - Single day for clients of all stockbrokers in India

This is how the retainable margin is calculated (extract from NSE’s FAQs): [image] Example: Cash - 1 lac Collateral pledged - 10 lacs Margin required - 1.5 lacs First, 50% of the margin required is retained in form of cash i.e. 75k. For the remaining 75k, the collateral pledged balance is checked. In the above example, since collateral is 10 lacs, the remaining 75k can be utilised from it. The stockbroker can retain up to 225% of 1.5 lacs i.e. 3.375 lacs. 75k is already collected in cash…

@TheGouda

While margin required to be maintained 50:50 in cash and collateral.

Maybe I haven’t understood what you have written here, but even this is incorrect. Cash is only required only for MTM, brokerage, charges etc., rest if cash collateral > non cash collateral, there’s no need to have cash > collateral.

[TheGouda]

@SachinSingh

In the link you shared, it says 50% is retained in cash, and not collateral.

You’re right. I’ve updated my response.