The penalty is only if you don’t have sufficient upfront margins. This is the penalty structure on NSE. But unlike before the penalty has to be borne by broker, so even if you wish to pay the penalty the broker can’t allow you to trade for more than what the margin in your account can allow to trade.
These changes need so much work at the broker’s back-end software.
Margins, intraday limits, EPI, T+1 check, reporting at EOD…
I have faith that Zerodha can pull it off but what about other brokers who are running on old systems?
The changes need good robust testing.
How does SEBI/exchanges verify the compliance of brokers?
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@nithin:
Couple of questions -
- Currently, Zerodha requires customers to pay the entire trade value for delivery of shares at time of purchase.
Will Zerodha allow delivery of shares with margin payment on T day and the remaining amount on T+2 adjusted for day wise MTM? - Apart from the ‘approved list of securities’ available for margin (via pledge), SEBI has also allowed liquid scrips for margin.
Does Zerodha plan to allow additional scrips for pledging. If yes, by when?
No, we will continue the current way.
I think those will be part of approved scrips, if not which scrips you are talking about?
Can we take multiple intraday trades one after the other on both sides - closing one position and opening new position through out the day in different stocks?
How the settlement for this will look like?
You can take multiple trades, you just can’t use any profits made to take the trades.
Eg. If you have 50k you can use that to take multiple trades on same day but if you make profit and your balance increases to 55k you will have to use 50k only, not 55k.
Profits in Equity segment are settled on T+2 days while for F&O profits are settled on T+1 day. So you can use profits only after settlement.
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Oh, so the broker has no right to recover that penalty from its client?
Right,broker has to pay.
Say reliance I have 20 Shares in Demat which i am considering it for investment. Also i play reliance daily on intraday basis, (i.e) Sometimes i buy @ market open and sell in-between or I sell @ market open and buy in-between. SO how will this be affected?
So @siva Can you put it in layman terms? What I understand is it is possible but there will be some additional margin for it and it will be back in T+2 days
I am referring to this part in the circular.
The ‘approved list of securities’ is available under derivatives - monthly report.
‘Illiquid securities’ can be searched in nse circulars.
Link for BSE - https://www.bseindia.com/markets/Equity/EQReports/Illiquid_Scrips.aspx
A lot of securities which are liquid are not a part of the ‘approved list’
I believe with this SEBI rule, the list of securities which can now be pledged for margin shall increase meaningfully.
Please advise.
Yeah.
Right, without having additional money it is not possible.
Thanks. So with additional money its possible
I understand that peak margin reporting will be an added effort for you even if you can continue providing the current leverages till Q2 2021 but phased implementation will really help us to acclimate to the new margining system.
At least please consider this aspect for retail traders as the new system is already so hard on traders who depended on leverages for their trading strategies.
If you can continue to implement it in phased manner other brokers will too follow the protocol.
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I agree with you man.
May be for Cash segment, penalty seems to be from Sep 1 and for FnO from Dec 1.
From SEBI circular : https://www.sebi.gov.in/legal/circulars/jul-2020/collection-and-reporting-of-margins-by-trading-member-tm-clearing-member-cm-in-cash-segment_47220.html
2.2. The penalty provision for short - collection / non - collection of upfront margin in cash segment shall be implemented with effect from September 01, 2020.
May be For FnO
From SEBI circular : https://www.sebi.gov.in/legal/circulars/jul-2020/framework-to-enable-verification-of-upfront-collection-of-margins-from-clients-in-cash-and-derivatives-segments_47101.html
7 . The provisions of this Circular shall come into effect from December 01 , 2020
Framework to Enable Verification of Upfront Collection of Margins from Clients
in Cash and Derivatives segments
Phased adoption
The peak margin obligation of client across snapshots, as at (iii)(b) above, shall be adopted in a phased manner, as given below:
This is for end of the day margin requirement in stocks, this is getting introduced only from Sep 1st. Peak intraday margin penalty starts from Dec 1st.