Risk based margin in F&O

Most of us are aware of the margining system in the west where they collect margin to the extent of one’s risk for hedged positions, that gives the trader the flexibility to manage his own leverage and strategize.

I keep reading news articles where brokers are constantly in touch with SEBI and Stock Exchanges for flexibility in margin. Zerodha now being the top broker in India, I assume @nithin must be aware of the developments for such a margin system in India. So my question to @nithin, is there any hope for such a system in India? Is NSE or SEBI working on or even considering such a system? Eventually, I guess that might happen but are there any plans for now?

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As I know there are no plans as such from regulators for now.

Although margin trading have some benefits for experienced traders, it can be very tricky for new traders on the market due to lack of trading knowledge in this manner. So, however it sounds, it might be for the moment good option not to have margin trading

This will always be the case even 100 years from now until people actually experience it and learn to manage risk in tandem with their risk profile. No matter how much leverage a product provides, it’s upto the trader to actually use that much leverage. One could lower contract size or hedge if he/she is uncomfortable. Experienced traders should not be punished for the mistakes of casual or greedy traders.


Derivatives trading is already an highly leveraged product. On top of it, brokers provide huge margins for intraday thru bo/co/mis.

No other business has this sort of pricing advantage. Government has a concern that one particular field/business (stock market) cannot have so much advantage over other businesses. Finance Minister has even expressed his concerns that this is like government itself incentivising stock market and demotivating other businesses.

Yes you are right , it is ridiculous to block margin of say 60000-70000 for a position which could at worse loose only say 5000 odd something.
This could drastically affect returns of traders using hedged strategies.

Already participation of people in Indian market is very less as compared to developed market ,so there is indeed need to incentives it.

Politicians are known to hate stock market in their speeches, because it’s capitalist and does not appeal to general public who think stock market is free money. We take risks, sometimes lots of it, and we get paid to take those risk, which in turn helps the stock market remain liquid. We’re not asking for free money, we’re ready to guarantee that in case we lose, we’ll fully pay our losses, what’s the point of blocking 1 lakh, when all I can lose is 20k? That’s negative leverage if such a word exsits. Imagine paying 5 lakhs if you want to buy 1 lakh worth of reliance share…not the best analogy, but hope you get the point. SEBI is just being lazy here to bring in such a complex risk management system. Status quo is just convenient for them, they’re just hiding behind the statement that they want to protect investors. Look at our option chains, it’s a desert in terms of liquidity, especially the next month. What’s the point of introducing such contracts when they can’t ensure a fair liquid market? Price discovery is a joke.


Sebi can apply risk based margi from next week if not then may from next month