Thanks Siva for your reply. Are you a part of the Zerodha team and can I take it as an official statement from Zerodha?
Yes, I am part of zerodha. But coming to margins, zerodha dināt increased them but sebi did in last few months.
Yes, zerodha increased margins in cash segment. There no circular from sebi reg cash segment margin restrictions.
Ya, cash segment we did considering the volatility.
Could you please explain logic for having mis more leverage than CO?
Will update here tomorrow.
Siva, there are a few things that are disconcerting in your reply. Enumerating them below:
1.You accept that India vix has tapered down below the long term average but have pointed that it represents only nifty 50 stocks and doesnāt represent Midcap and Small caps. Fair enough, but why have you not reduced margin requirements for at least Nifty stocks given the fall in volatility. You follow dynamic adjustment in margin and sometimes adjustments are made intraday in case of high volatility, which makes sense, but this dynamic adjustment should cut both ways. Any fall in volatility should result in subsequent decrease in margin requirement, which I am sorry to say has not happened.
2.As a corollary to the above argument, I can assure you that Mid cap and Small cap stocks witnessed huge fall in volatility in last week trading (much higher fall in volatility than VIX index) but no subsequent adjustment were made to margin requirement for those stocks.
3.There is an unexplainable disparity in the way leverage for MIS and BO/CO is provided. Eg ACC has MIS multiplier of 12.5x for either long or short trade on the stock, and it makes complete sense as volatility of the stock is not unidirectional. On the other hand BO/CO multiple for ACC is 10.4x for long trades and 15.2x for short trades. What is the rationale behind it? By using disparity in multiplier for long & short trade you are introducing your bias in the trading system, which in this case is a bearish bias.
4.You see volatility increasing before election period but someone can have a completely opposite gut feel of a decisive mandate in the elections and thereby expect the volatility to reduce further. It seems that you are basing your margin decisions on gut feel whereas they should be based on statistical or mathematical variables. It should not be the case of your perception against someone elseās but rather on current volatility based on some index like India Vix Index.
5.You have also pointed out that certain regulatory actions have resulted in tightening of margins. If this was the case it should be applicable across the spectrum of brokers, something that I havenāt seen for myself.
Thanks & regards.
As I said vix is for avg nifty 50 stocks, but few stocks in nifty are still volatile. Anyhow we perceive currently it is risky to provide much higher leverages for intraday cash, also we donāt evaluate volatility on daily or weekly basis, we give little higher timeframe. Will let you know why there is difference in leverage for same stock on buy and sell side for BO.
FNO margins are increased by exchanges recently, I canāt comment about other brokers but we charge what is mandated by regulators.
Although this is out of context, I personally recommend you not to depend so much on leverages as rumor is that, sebi is considering to bring an uniform policy on intra day leverages and it may cut to much lower levels.
Siva, could you please get back with answers?
I have checked this today and it is blocking same amount of money for BO sell and buy with same number of stoploss points. Would appreciate if you can give specific case, so that I can check tomorrow in live.
@siva do you guys have a special subscription for higher leverage on nifty and banknifty expiry trading, for option writing?
like 5paisa, they give a platinum subscription of Rs 500 PM where you get 5x intraday leverage on a regular day and 10x leverage on expiry day
No, we donāt have any as such and no plans to introduce.