In quarterly settlement, the pledged MFs and shares are getting Unpledged automatically so i am facing the below problems as a day trader
(i) As a day trader i cant use all the funds overnight so every three months once i have to face this issue
(ii) To pledge the shares again its taking around 2days, So can’t able to trade for those 2days
(iii) End up paying 60rs + GST per scrip for pledging every 3 months once
@nithin pls do something regarding this or give a pro tip to avoid quarterly settlement
If you suggest overnight FNO position at least one day in that quarter, Am i need to utilize 100% of the fund/ collateral margin for that trade?. I mean if i have 10L collateral margin what should be my minimum margin utilization for that trade
The Quarterly settlement circular is applicable to both fund and securities. As such, if you haven’t used funds to the extent that your account gets settled by way of deemed settlement, then its compulsory for any broker, not just Zerodha to return such securities back to the client’s demat account. If a member doesn’t do that, he isn’t being compliant.
SEBI allows a member to retain upto 2.25 times the overnight margins and then if there’s excess a case to transfer securities back arises.
Example: You have pledged stocks for which you’re getting margins of Rs.10 lacs post haircut. Assume this is the only margins available, no cash in the account. On any given day, if you have overnight positions of more than 4.5 lacs, your account gets settled by way of deemed settlement, since 2.25 times 4.5 lacs is more than 10 lacs. If you haven’t used up margins, then as said earlier, the securities will have to be transferred back.
We use an internal logic for the settlement of accounts. The day you receive your stock/funds back, is the day your account is considered settled. You would also receive a ‘Statement of retention’ and an ‘Account statement’ from us explaining the basis of such payout. Your account has to be settled once in 90 days, this is what SEBI has mandated. From the 45th day of the previous settlement up until the 80th day, if you use up the 4.5 lacs even for one day, then the account gets settled by way of deemed settlement. I know its a little tricky for you as a client to keep track of these dates, but the idea is not to take a trade in order to ‘avoid’ receiving funds/securities back. The Quarterly Settlement rule was brought about keeping the client’s interests in mind.
Thats absolutely not true. Quarterly settlment is pure headeache to intraday traders and do no good to them. 90 days is huge time and if broker wants he can eat all the clients money in 90 hours. These policy makers thinks nothing before implementing policy ( this is true across all their departments). I bet there are many another Satyam, PNB out there and SEBi can do nothing to prevent these.
SEBI can only torture traders.
hi zerodha guys, @VenuMadhav@Bhuvan@qna i am an intraday trader who sells option and trade equities and i dont do positional trades, i have around 23 lakhs of liquid funds as collateral, and during every quarterly settlement i have been intimated around 10 days before but not the exact date of settlement. so one bad morning when i login i find no margin with my trading account and i miss the trading on that day. I contacted customer care for a workaround and they asked to make the strike expire for settlement . so i have decided to leave options sold on thursdays morning to expire worthless by converting MIS to NRML. Even this workaround seems not working and i am intimated that my account is due of quarterly settlement. Now i am planning to sell otm strikes for nearly half of my total available margin on wednesday evening and square it off by thursday morning, to have a positional trade. will the above workaround really work for my account to not be quarterly settled? or any other suggestions ?
The exact date of settlement is hard to arrive at.
Funds can be transferred via payment gateway the same day.
If the positions you are holding expire, then you aren’t carrying forward any position. If there are no margins levied, then the account doesn’t get deemed settled. For account to get deemed settled, margin used*2.25 > margin available in account
Please don’t look at ‘workarounds’ for the account to not be settled. I understand the brief bit of inconvenience, but the rules are framed by the regulator keeping the end investor’s interests in mind.
Pledging gets least 1 day to get converted in to margin. since my trading style is based on options selling, 95% of my funds lies as collateral. it seems i am few of the ones who is affected by the framework. Zerodha can Come with options like instant pledging if possible. i am not expecting too much from zerodha but zerodha always comes first in something new to be introduced among traders community.
There’s a change in the way pledge will function from August 01. Today, stocks move out of your demat account into the broker’s account. From August 01, the stocks will remain in your account, a pledge will be marked to in favour of the broker. Once this rule comes into being, brokers may not be required to carry out any settlements for stocks. Awaiting clarification from the Exchanges.
Unless the broker settles every ones pledged shares on the same day, it does not make full sense.
Exchanges must have a regulation that all settlement should happen on the same specific day. So, it helps day traders to plan ahead. I believe, that would help even the brokers to plan ahead. If this suggestion helps day traders, brokers should bring this up in their meetings with exchanges.
The point here is that there are a lot of people who use systems and are disciplined traders who trade everytime their setup is in play…For them missing out a single trade which comes out of their strategy setup is equal to NOT following the strategy…So this hurts disciplined traders as well because of the turnaround time of the entire process…I.e I am not sure if the settled funds will hit my account before 9 am so that i can transfer it back
We’ve added this note on the Funds page that gives a 7 day range within which the next Quarterly settlement will happen. We’ll try to narrow it down, it’s very hard to pinpoint the exact date. This will help you plan your trades better.
Hi Venu, with the new pledging rules from aug 2020, the pledged shares would reside in investors demat itself. So even now our shares will be automatically unpledged quarterly in case of non usage of margins or does the new rule change something ?
Under new pledging system, the securities you pledge remain in your Demat account. So the pledged securities won’t be unpledged during quarterly settlement.
