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

Broker keeps it in form of some type of FD which they have personally confimed here and intrest earned from some type of fd is 10 15 percent of total revenue just imagine the quantum of idle cash they are having (the most profitable startup in its category)

May be you are right. But there is absolutely no reason for us to blame the brokers. The rules are coming from SEBI. Brokers are doing as per the directions of the regulatory.

If you are not happy with the regulatory you should file a complaint against them. Just bashing out at one broker isn’t of any use.
It’s not that I am taking Zerodha’s side here. I have expressed my concerns too on other posts. It’s just that here I feel broker shouldn’t be blamed.

See point is whole ecosystem gets destroyed
Sebi unilaterally doesnt take decision
It has CC,brokers,and reports from various agencies before forming law does multiple consultation
Brokers have put in most harm to the ecosystem by testing limits of regulator
Eg-karvy default showed how brokers were doing mischievous things n sebi tried to close the door
Algo trading is rampant these days y brokers do it generate volume and brokerage (law is in work curb them)
Brokers again gave 40x 50x 100x intraday margin creating systematic risk
You name it ,there are only few instance where it was not it control of clients or anybody namely crude going to negative system were not in place

I understand all that you are saying. May be everything that you are saying is right but then can we change anything by just posting over here.
Sometimes we do not know whats really happening on the other side. We tend to believe everybody is manipulative.
We have an option. Trade or not to trade. If you don’t like the system then we should just not trade. If you want to trade then we have to follow rules.

Can I say having compulsory helmet is just to favour helmet producers? You have an option. Don’t ride the two wheeler if you don’t like wearing helmet.

Again if you feel brokers make a lot of money, we should also apply for membership with the exchange.
From where I see, once you have agreed to Terms and conditions of this game, you can’t cry foul. From the beginning we know margin is required for trading. We all accepted these terms and started trading. Now we can’t say it’s not fair.

Now this is just my opinion. I know you don’t agree with me. My opinion comes out of my experience in the industry I work. I know how people talk horrible things about my industry. Some things are true too. But nobody hears our side of the story.

I rest my case here. Please don’t take anything personally :smile:


Can we propose introducing spreads as a single contract (Ex. Nifty 17300 CE and Nifty 17400 CE with some unique symbol)? Traders can either purchase a debit spread or sell it (making it a credit spread).

So, all traders who enter hedged positions will at least trade among each other. Liquidity will be an issue in the beginning but in the long term, it will be beneficial to most stakeholders.

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What is your clarification regarding NSE circular that clearly mentions “members are
not permitted to pass on the penalty levied by clearing corporations on account of “short/non-collection of
upfront margins” to clients under any circumstances”

This is not something that came from August 1 2022. Multiple other brokers like Paytm, Finvasia had been enforcing such rules much before i.e. you cannot close hedged position if you have naked sell position and people would have never received any margin penalty. It seems to be failure from your risk management system that allows to go naked sell side.

@nithin @Meher_Smaran

Kindly inform if NSE circular is just a guideline that zerodha and other brokers can opt not to follow as per their stance or NSE circular is like an order that has to be followed by every broker in any case whatsoever.

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As I mentioned earlier, brokers were contesting this circular, saying it is impossible to comply with if there will be penalties on margins going up during the day. This anomaly stopped from Aug 1st.

This particular circular, as I mentioned above, had issues because it was impossible for any broker to comply. But otherwise, whatever exchanges put out have to be followed by brokers. Exchanges in India also act as regulators.

There will be infinite combinations of spreads, and liquidity is almost impossible. The only reason, like I said earlier, this is possible in the US is because there are market makers who buy order flow from brokers, so brokers can decide if they want to offer trading in spreads or not, unlike in India, where it is not possible. I think having market makers pay brokers for order flow is a convoluted practice, and it is good that it isn’t allowed in India.

How much time will you give us before your system automatically squares off our positions ?

We want to be in a state where square-offs are instant if margins are negative. We will continue to give enough time for mark-to-market losses, but the plan is to not give for margin increase as the customer is willingly allowing the account to go negative balance. The second solution is to not allow exiting long positions that can increase margins and push the account into a debit balance. The second solution is tougher and will take some time to implement, but definitely a better solution both for the customer and us.


@nithin 2 of my family zerodha account reported a peak margin shortfall between 2.15 to 2.45 pm although we havent taken any trades in this interval.

I am assuming it might be because of span margin update by the exchanges & you

currently both those accounts are having sufficient margins.

How will you handle this issue ??

Hey @viswaram

If a customer explicitly takes an F&O trade that causes their account to go into a debit resulting in a negative margin balance intraday or overnight, for example, exiting a 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.

If you did not take any trade (in most cases, exiting a margin benefiting leg of hedged position) which caused the margins to spike, then, the brokerage would be 20 rs/ order.

In any case, there won’t be peak margin penalty for clients.

We are still working on having a scenario where its ideal for both broker and client. will keep you updated in case of any change :slight_smile:

do you want me to DM you the client ids ?

The peak margin was result of the SPAN file update you have done after 2pm

I have not taken any trade during the window 2.15 to 2.45, thats why i shared the screenshots

@nithin @Bhuvan

In case of cash shortfall (50% cash requirement) in FNO segment margin, can we add cash into demat account on Saturday to avoid interest cost???

Hi @ashok_bansal

Yes. You can add funds into your Trading and demat account on saturday to save and avoid any interest cost (in case of shortfall)

I have understood the F&O part

Please help with the Equity Part.

In Delivery trade I have sold XYZ share 1000 Qty @ Rs 100 = Sell value is Rs 1Lakh
I have received an 80% Margin of 80K & 20K blocked

From the 80000 value I Bought the same stock from position 800 Qty, Then in my position only 200 Qty left for the Delivery Sell transaction.
Again I bought 100 Qty & 100 Qty
Finally, I have bought the entire 1000 Qty from the positions.

My question is should I have to maintain the 20% margin to avoid the penalty?
Because my opening balance was Rs 0
Should I need to maintain the 20 % upfront margin for my trade?

If you have sold deliveries worth 1 lac, you can buyback the same worth 80k (assuming your balance is 0)

if you want to buyback 100% of what u sold, you would require additional 20% balance for the remaining 20% qty as 20% is blocked by exchanges as delivery margin.

The case of penalties may arise, if we sell our holdings, do intraday trading and buy back the shares, that’s when there is a risk of having margin shortfall.

Source : What are margins and how can margin shortfall occur?

To answer your question :

  • If you want to buy back 100% of delivery sold (without other intraday trades) - you need to have 20% more balance. that should be sufficient.

  • If you do other intraday trades, you should have additional amount worth those intraday trades to avoid any shortfall.

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Most of this problems should get solved when cash settlement for fno obligation should get this sorted or have a account with broker who give immediate delivery of money in bank account or can buy fully