Update 4th Aug 2020 - Margins for trading stocks & Intraday leverages

[maya_g]

@maya_g

Regarding intra-day leverages in FnO, I think we need to look at intent of SEBI. Yeah, for intra-day they want them to be just (SPAN+Exposure in FnO), but not in one shot, say Oct 1 or Dec 1, but rather in phased manner. It’s a slow kill / phased process providing time for markets/market participants to adjust to new rules.

Thanks @siva. Really appreciate patiently listening to our queries and replying.

Regarding intra-day leverages in FnO, I think we need to look at intent of SEBI. Yeah, eventually for intra-day they want them to be just (SPAN+Exposure in FnO), but not in one shot, say Oct 1 or Dec 1, but rather in phased manner. It’s a slow kill / phased process providing time for markets/market participants to adjust to new rules.

[shivshankar]

Where does it say that Shares sold and Early Paid by the Broker to the Clearing Corporation cannot be used as margins for any other Trades in any segment. The FAQ’s don’t talk about this at all.Clarify this doubt please

[tapati1]

In commodity sebi has told that peak margin reporting till 5pm so after 5pm broker can give leverage as per broker wish

[IRA]

But they have risk based system for hedged trade not like us sebi lives 15 years back only

[ShubhS9]

@shivshankar

Where does it say that Shares sold and Early Paid by the Broker to the Clearing Corporation cannot be used as margins for any other Trades in any segment. The FAQ’s don’t talk about this at all.

You can use funds freed from sale of your holdings to take fresh positions in stocks or use as margin for F&O.

As mentioned in main post

@nithin

Sale proceeds from holdings can be used to purchase new stocks

Like how you can currently use stock sold to buy other stocks, the same will continue to be allowed from Sep 1st 2020. By debiting your demat account and doing EPI to the exchanges by 7.30 PM on the same day as explained above, we can allow you to sell your stock holdings without any margins. Also, the stock being EPI can be considered as margin, allowing you to buy more stock from the sale proceeds

@nithin

Holdings sold can be used to trade F&O

As it is now, you will be able to sell your stock holdings and use the proceeds to enter F&O trades immediately. This is again possible after the clarification from exchanges that Early Payin (EPI) of stocks sold can be considered as margin, both for new stock and F&O trades.

Would suggest you to read the main post again.

[nithin]

@maya_g

Returning to your analogy, think that there are exceptions/phased implementation of proposed traffic rules.
In the first month, you can jump orange light for say, 20 times, 2nd month 10 times, 3rd month 5 times, 4th month 0 times. In each month, penalty is levied, if no of violations is more than specified number.
This is in essence, SEBI circular.

We will get to know in October if exchanges or SEBI will allow this to continue or not or will question the brokers on why it is being allowed.

[nithin]

@SachinSingh

Any chances of the pledging charges increasing?

Don’t think so.

[nithin]

@Ajay_Gupta

Sir, don’t you think CDS should be given priority in terms of leverage because naturally the risk is capped in the currencies because of the limited trading range. Currently, we are getting adequate exposure on zerodha for trading currency derivatives. Would you like to comment on the same?

Currency margin requirements are already much lesser due to the lower volatility right? Around 4% compared to the Nifty margin of over 17% currently.

[nithin]

@tapati1

In commodity sebi has told that peak margin reporting till 5pm so after 5pm broker can give leverage as per broker wish

Hmm… no, it doesn’t say that anywhere that it is only till 5pm.

[Sou_Mon]

Nithin, will this 5x for cash in intraday remain unchanged ?
OR, is there any chance from SEBI to cut the 5x too for intraday after 1 year or later?

[TradeB2B]

@siva please tell very clear for us which ever is cash equivalent securiries , for ex ( money market , liquid muftual etc ) to pledge in the new mechanism ,

[Harsh_08]

Hi @nithin and @siva are the brokers still pushing for relaxation on span+exposure margin FNO or this is the final decision.

[IRA]

Sir can you pls elaborate are you asking for intra fno or hedged trade in fno (I think brokers need push for only 6 sigma span and remove exposure for hedged trade decreasing efficiency of trader in terms of roce)

[siva]

@Sou_Mon

will this 5x for cash in intraday remain unchanged ?
OR, is there any chance from SEBI to cut the 5x too for intraday after 1 year or later?

We believe it will continue, but you never know what SEBI can come up with.

[siva]

@TradeB2B

please tell very clear for us which ever is cash equivalent securiries , for ex ( money market , liquid muftual etc ) to pledge in the new mechanism ,

Yes, will be allowed in new system provided they fall under approved securities by clearing corporations.

[siva]

@Harsh_08

are the brokers still pushing for relaxation on span+exposure margin FNO or this is the final decision.

This seems final as of now.

[dilip1]

Can i sell X company shares from my holdings @ 10 am and use the funds to buy Y company shares @11 am and sell them @2pm and use the funds to buy Z company shares.

[siva]

You can do.

[Venu]

How much penalty will be charged if I carry multiple trades in intraday for 1 lac rupees ? Formula please …

[siva]

@Venu

penalty will be charged if I carry multiple trades in intraday for 1 lac rupees ? Formula please …

Why penalty?