Why did the exchanges publish a clarification on no additional intraday leverage?

[Raz]

Something like PDT in the US market where an leveraged trader can take only upto 3 trades a week, and taking 4th leveraged trade blocks the account for next few weeks. Or else, they should be having 25000+ USD in their account to trade with leverage.

[Vamsi]

Can I expect same with equity ? means some what additional than VAR + ELM.

[siva]

No, var+elm will be mandatory.

[trader_dude]

@siva

Anyway you can send notifications everytime there is a change in margin for any instrument. That would be really helpful.

[OWL]

@nithin How much leverage is okay in your opinion?

[nithin]

hmm… tricky one. Personally I think it should be as little as possible. Most people don’t know how to manage leverage. As long as there is high leverage for naked trades, greed won’t let people attempt to trade lower risk - higher odds of winning strategy (like shown below).

Benefiting from the new margin framework- an example

The new margin framework has been live from June 1st, margins for hedged positions have now dropped by almost 70% as compared to earlier. We have been getting quite a few queries on - how much margin have dropped and the most efficient way to enter these types of strategies. So find below an explanation with an example: Today is June 11th 20200, assume you have a bearish view - Nifty (currently at around 10025) won’t cross 10200 by the end of the expiry (June 25th). Most retail traders when …

[Prakhar_Agrawal]

Or Do you think something like PDT rule should apply here too

[manas111]

@siva any updates on this?

[siva]

@manas111

any updates on this?

No new update as I know.

[namitjain2890]

@nithin @siva New circular came out yesterday, NCL/CMPL/44977. Which mentions upfront margin in advance of trade for FnO. Is this the final nail in the coffin for intraday leverage?

[Vamsi]

Trading member means Traders or Brokers ?

If Trading member means Broker we may get margin by broker funds right ?

@nithin, @siva please elaborate the circular…

And I did not get the date from which it will be implemented.

[nithin]

@namitjain2890

@nithin @siva New circular came out yesterday, NCL/CMPL/44977. Which mentions upfront margin in advance of trade for FnO. Is this the final nail in the coffin for intraday leverage?

They are rewording all the old circulars which didn’t say explicitly that it is upfront before taking a trade. They are doing across the board wherever the word was used. Standing today, no broker should ideally be giving any intraday leverage. But I think regulators and exchanges will come up with something that allows it in the next few weeks - with a proper framework. Not allow brokers to offer as much as they want.

[OWL]

So technically no change in leverage for now…?

[nithin]

As of now, nothing. But there will be something soon I think.

[magicpoison]

Thats really bad news for a lot of traders.

[Default]

@nithin

We as Zerodha have always put our own capital whenever a customer had traded without sufficient margin

@nithin how do you scale this?
the more accounts the customers open, the more floating capital you must have.

[nithin]

@Default

how do you scale this?
the more accounts the customers open, the more floating capital you must have.

Yep. Going forward this is going to be the only way any broker will be able to offer intraday leverage.

[magicpoison]

so leverage isn’t dead yet, there are some ways brokers can offer this to some extent?

[nithin]

If I had to bet on it, yeah, it isn’t dead. But you never know.

[namitjain2890]

Going forward? This rule hasn’t been enforced yet?