How zerodha filter out stocks which will be open for intraday. Is there any procedure laid down by sebi?
The selection of stocks for intraday leverage will be based on the broker’s discretion. In Zerodha selection of stocks will be based on several criteria like market capitalization, volatility of scrip, the traded value of the scrip and should not be under exchange surveillance like ASM/GSM/SMS scrips.
The list of scrips allowed for Intraday will be updated every Monday end of the day.
If that’s the case then why zerodha does not open all stocks for intraday except those ban under F&O and those under exchance surveillance. It can help them to earn more and we get more stocks to trade.
and one more…
the list of scrips allowed for intraday will not be update for the whole week once updated on monday?
Instead of banning the stocks from Intraday, Zerodha should decrease the leverage for risky stocks.
There won’t be any risk to Zerodha If they don’t provide leverage. @Ragavendran_M
If all the scrips are allowed which doesn’t match the criteria there may be a possibility of many scrips that hit the circuit. This will cause risk for both client and the broker.
The list may be updated any day of the week based on scrips volatility or if any of the allowed scrips moved to exchange surveillance. But it is rare case scenario.
There won’t be any risk to broker, if you don’t provide leverage for those stocks.
If today, I want to short 100 shares at 1000 price (total 100k). Broker can block 100k from the client’s account, and allow him to short. So even if the stock hits 20% circuit, client wont lose more than 100%.
So broker has 0% risk. Only client will be at risk. In my opinion, it should be the client’s decision. Zerodha can add an nudge, if they want. @Ragavendran_M
The exchange will not consider the trade has been done for delivery or Intraday. As per the exchange if the stock was sold, at end of the day broker has to deliver the shares to the exchange(clearing corporation). If the stock hits the upper circuit shares will be short sold and it will be settled in the auction. If every day more number of clients results in short delivery exchange will ask for clarification from the broker and it may lead to any legal actions during audits.
Also on every day even if one or two scrips hit the circuit there may be many clients left with short delivery, this may also lead to an operational burden on brokers for settling it on auction, posting it on the ledger, and explaining it to the clients via calls/tickets.