The exchange clearing corporation will take five peak snapshots during the day. If you break the hedge position and the margin got increases for your open position, the peak shortfall will be captured.
Even though you close the position EOD, at the time of peak snapshot if your margin utilization is higher than the available margin the peak penalty will be applicable. Hence you may have received the notification.
Wonât a margin shortfall alert be triggered by your system in such a case alerting the clients about the margin shortfall?
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Yes, the margin shortfall alert also will be triggered to the clients.
Based on the alert or even otherwise, if the client immediately reduces the margins utilized and becomes margin surplus before the system captures the peak shortfall, then no penalties will be or can be levied, right? Please confirm.
I meant to ask, what if the client faces margin shortfall and rectifies that before the random peak snapshot captures the same? In such a case the peak snapshot wonât be able to capture the transient margin shortfall and hence no exchange penalties can or will be levied, right?
@nithin @Ragavendran_M @MohammedFaisal
- Suppose someone has sold 1 lot Nifty call option and sufficient margin was there while selling that 1 lot Nifty call option. Then at EOD, margin increases and there is margin shortfall at end of day. Kindly confirm in such a case, there is no margin penalty on customer.
- Suppose someone has sold 2 lot Nifty call option and sufficient margin was there while selling that 2 lot Nifty call option. Next day, at beginning of day, margin requirements goes up resulting in margin shortfall at beginning of day and customer squares off 1 lot Nifty call option at 0915 hrs. Kindly confirm in such a case, there is no margin penalty on customer (assuming peak snapshot is not at 0915 hrs).
- Zerodha is charging Rs. 40/- for orders undertaken in negative margin time. Kindly inform is there a plan to revert to Rs. 20/- per order in negative margin time also.
That is correct. But we would never know when the exchange will capture the peak snapshot.
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There wonât be any margin penalty for today but if margin is not brought in before the next morning, the peak margin will apply.
Yes, there wonât be any penalty if you end up squaring off or bring in margin before the snapshot is captured.
The additional brokerage is charged to disincentivise traders from closing the margin benefit leg of strategy positions. This regulation does not solve that problem. As soon as the margin benefit leg is closed, the margin requirement will spike up and a peak margin penalty is applied.
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Thanks for the clarification. One final query. Letâs assume thereâs no margin shortfall BOD, Peak or EOD⌠but there arises a MTM shortfall at EOD that needs to be cash settled. How long does the client have to make payment beyond which interest will start accruing on the shortfall?
Got it, so if I got a peak margin penalty notification but I have squared my positions and at EOD the margin is in positive, then I wouldnât have to pay any charges right? I believe from the above post going forward there wonât be any peak margin penalties but only EOD margin penalty isnât it?
Trying to clear the doubt once and for all,
Thanks
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MTM shortfall has to be brought in before the start of next trading session otherwise your position may get squared off due to margin shortfall.
So now you wont charge 40 Rs for brokerage anymore??
This has been answered here
assuming trader takes a position on T day and there is no shortfall on EoD T day but there is margin shortfall on T+1 day BoD
then can u pls share
a) what is the penalty charges
b) penalty is paid by whom ( trader or broker)
c) till what time next day (T+1 day) BoD can the trader bring additional margin to avoid penalty ( remember there was no margin shortfall on T day eoD)
c) if at 9.17am trader closes his position to become margin positive then also would he be charged penalty
many thanks
hi faisal if next morning peak margin becomes applicable then this penalty is charged to trader or broker??
@Ragavendran_M @MohammedFaisal
There seems to be some bug in the system. Yesterday (Thursday), my margin was positive till 3.30 PM. I did not exit any hedges before exiting the sell legs. Iâm sure of this because if I did break any hedges, margin would have gone negative and I would have gotten a margin call email and SMS immediately. But that never happened. I also constantly kept monitoring my margin and it was positive throughout market hours.
However, at around 6 PM, I got a margin call (SMS and email) and the margin on my account turned negative. I also got the provisional margin shortfall email. Do note that more than 90% of my positions were short OTM options that expired worthless. How can there be a margin shortfall (provisional) when margin in account was always positive from 9.15 to 3.30 PM? Will margin turning negative after market closes also trigger a provisional margin shortfall email?
On a related note, as per the contract note sent to me, the open positions expiring worthless on Thursday were settled at 03:40 PM. That being the case, my margin should have gotten unblocked at 3.40 PM. So getting a margin call at around 6 PM doesnât make sense.
Kindly DM ticket number or client id so that we can check and reply over the ticket.
@Ragavendran_M
Please provide your answer in this forum too as I too do the same sort of trading and may run into this problem in the future (although it has never happened to me so far)⌠In my opinion the described scenario should never occur as the weekly options expire at 3.30 pm on Thursdays freeing up all margins utilized until 3.30 pm⌠One possibility is that some additional trades were executed on the expiry day and resulted in peak margin shortage capture before the trades were squared off bringing the margins back to positive during the course of trading hoursâŚ
my Account value is 5.18Lakh, Pledged Holdings 3.76Lakh, so in this case during F&O monthly positional trading , iâll get penality ? because sometimes shows available cash in negative and avaialble margin always in positive ?
can you please clarify on this?
thank you in advance
Hi Deepak,
If your available margin is positive, margin penalty wonât be applicable. Available cash is negative because you are using collateral from pledged holdings. For the extent of the negative balance, overnight interest will be charged at 0.035% per day or 12.775% per year. This is an interest charge for not maintaining 50:50 cash: collateral and not a penalty. Read more.
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