Working capital requirements for brokerage firms to go up from Aug 1st 2022

Hey Everybody,

Please check out our latest Z-connect post to know in detail about the changes that will take place from August 1st, 2022

TL;DR : There won’t be any peak margin penalty for clients. The onus will now be on brokers which leads to working capital requirement going up massively.

In case, Client’s account becomes negative, for example : While exiting an hedged position, then the brokerage charges for orders placed during the duration where the account had negative margins, will be Rs 40 instead of Rs 20. This does not change anything for the vast majority of the customers. To ensure that this scenario doesn’t apply, simply ensure sufficient margin as always when taking trades.

More on this topic :point_down:

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Will the brokerage go up because of this?

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Hi @Meher_Smaran how will the Rs 40 brokerage be reported in our eod report?
Will all brokering charges go under 1 header or will be able to see two headers? Any way of capturing the time snapshot also of when we get charged for Rs 40.

If after the 2:50 pm update, our account goes into negative and it takes around 10-15 minutes to close the position, so for that, will there be any interest charges from Zerodha?
The article states that the onus is on broker so my guess is no but during that short time, it’s essentially the broker funding the client’s account, so does the broker expect any interest on that?
I do understand there’ll be higher brokerage for exiting position during that time when account is negative, want to know whether will be any other charges apart from that…

Y i am getting a feeling that SEBI is eventually moving towards removing exposure margin for hedged trade :sweat_smile:

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Eventually, the entire industry will have to increase the brokerage rates with all these new regulations. Unlike the US, Indian brokers don’t have other ways to generate income. I’d written this sometime back

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There won’t be any interest charges for intraday margin usage, even if it goes negative. Just the additional brokerage when exiting the position when in negative margins.

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It will all go under 1 header. It isn’t possible to show the time snapshot on the contract note. But you could potentially create your own position based on all the orders placed during the day, to figure when the margins were negative.

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Oh no, that won’t happen. :slight_smile: Margin requirements are calculated using SPAN & margins will drop when risk reduces for the F&O portfolio.

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“Orders placed during the duration where the account had negative margins, will be Rs 40 instead of Rs 20.”

So the short-margin penalty will not be charged ?
Or
Both short-margin penalty & 40 Rs brokerage will be charged ?

@ShubhS9

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The short-margin penalty won’t be passed on to the customer. We are also working on auto squaring off positions when the account moves into negative margins.

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No more peak margin penalties for users. Brokers have to bear it. Great news for us end users :slight_smile:

Need to see the measures brokers take to avoid paying penalties

I am talking about credit spreads dont understand need of exposure margin(you introduced addtional brokerage of 20 rs if one leg of hedged position is squaredoff) there i think there is a need to lobby for it like what ANMI did for peak margin do something for us also

Upstox has started withholding sale proceeds of delivery stocks. Today I sold a stock from demat in my upstox a/c. They didn’t give any money. Earlier I got 80% instantly and rest 20% next day. This inspite of fact that upstox knows that security actually exists in my demat and there is zero risk.

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@Meher_Smaran Hai boss even recommended feature are not available , even you are not replying , zerodha is not bring any new feature in 2022 , then how capital requirement is going high

1- instant pledging
2- instant cash withdraw
3 option chain in kite
4 trailing stop loss in kite
More and more first fix these thing

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@Meher_Smaran @nithin

  1. If available margins go negative intraday or end of day basis, in both cases, will there be any short margin penalty??
  2. What about short margin penalties cut till July 2022. Will that penalties be refunded to clients as penalties were chargeable to broker and not clients??

Request for some allowance may be 5-10% since margin fluctuate during market hours especially on expiry day in order to optimal utilisation of margin. Thanks.

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There is a new option chain on Kite.
Trailing SL isn’t on our list of things to do. It is tricky to offer this feature.
Instant cash withdrawal & Pledging will take more time.

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Starting Aug 1st, there was a regulatory change that says no penalty if intraday margins go up. All penalty is calculated based on the beginning of the day margins. Until this was done, this was an impossible regulation for any brokerage firm to comply with. Now that this issue is fixed, we will not pass any more upfront margin or peak margin penalties to the customer. But penalties for MTM (mark to market) shortfall, delivery margin, additional margin, etc. will continue to be passed to the customer (regulations allow for this to be passed).

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