Leave hedging of future with option i can understand the risk.tell about only option like credit spreads and debit spreads here there is no need for exposure margin there where options are of same expiry then
These rules are framed keeping in mind volatile markets as systemic risk usually happens in such mrkts. In both the credit and debit spreads too, the risk remains esp. in stock options where there’s still not much liquidity.
It is the same, isn’t it? Assume you are long and short Nifty calls. If you exit the long calls first, the margin for short calls will shoot up. Exposure margins ensure some semblance of risk being covered when long options positions are exited first.
Ohh cmon sir most of brokers have already put in place where broker have blocked clients from exiting short position giving reason like low margin eg paytm
Span margin have been stress tested very rigorously by SEBI,EY and the sub committe they cover 99.48% of all risk even the single day fall of DHFL of 40%
Hmm… it isn’t as straightforward as that. There are many edge cases, especially in stock option contracts where liquidity is an issue. There is no point debating about this, like I said earlier we would have loved if margins for hedged positions were lower.
Leave stock option i understand the situation of it as there are nuisance of delivery of stock at the end of expiry lets start with nifty and bank nifty where it is cash settled and to best of my knowledge most of volume happens in nifty and banknifty so liquidity also should not be an issue
yeah. hopefully things change on the index options front. 
the thing is : brokers make more money with less regulations and less margins. exchanges and regulators are kind of trying to discourage retailers so I doubt they would lower these margins.
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Oh okay. So we still can’t blame the broker for this. 
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Wrong they have conflict of intrest here they earn intrest on margin money we keep (which 50% now has to kept in cash)
Again I am not sure. But I feel broker also has to keep the margin money with the exchange. @nithin am I wrong again?
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 
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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.
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.