Major Regulatory Changes in Margin Requirements From Sep 1, 2020 For Example Zerodha Brokering

There are two major regulatory changes from Sep 1st, 2020:

  1. The Method of Pledging Stocks
  2. Upfront Margin Requirments (Stocks and F&O on NSE, BSE, MCX)

New Pledging System

Until now, when you pledged stocks as collateral to receive margins for trading F&O, you had to move it from your Demat account to the broker and in turn to the clearing corporation. Going forward, the stock will continue to remain in your Demat account and can be directly pledged to the clearing corporation. Over the last weekend, we have unpledged all securities which were pledged with us and transferred back to the customer Demat account. Many have already repledged it using the new mechanism.

How can I pledge my holdings under the new pledge system?

In light of the recent regulatory changes, your holdings cannot be transferred to your stockbroker for pledging. 

You will need to authorize a pledge request in favour of your stockbroker who will then re-pledge it with the clearing corporations for allowing you margin benefit. The shares will continue to stay in your Demat account but will be marked pledged. 

You can follow the below steps to pledge your holdings under the new system.
Raise the pledge request on Console

Raise the pledge request on Console

Visit the link you have received on your registered email ID or mobile number.

Email ID


Visit the link you have received on your registered email ID

Mobile

Visit the link you have received on your registered mobile number


Once you’ve clicked on the link, you will be redirected to CDSL’s webpage where you are required to enter your PAN number and generate an OTP that you will have to key in to authorise the pledge.

Authorize The Pledge


Zerodha has setup the pledge



P.S: Pledge will be processed in batches, once at 2.00 pm and once at 5.00 pm. Even if you create a pledge request at 11.00 am, you will receive the email from CDSL only at 2.15, once Zerodha has setup the pledge

It's important that all pledge be accepted by 7.00 pm. Failure to do so will mean that you will not get margins against the pledged stocks.

New Magins System


There are going to be a bunch of changes from tomorrow with respect to margin requirements. Find below a quick summary;

Sale Proceeds From Holdings Can Be Used To Take New Positions

We are ready with a new system to debit shares from your Demat and make an early Payin to the exchange on the day it is sold. By doing this, we can ensure that you can continue using the full value of sale proceeds from your stock holdings as soon as you exit them to enter new positions — other stocks or F&O positions. While you might hear that this isn’t allowed at some other brokerage firms, nothing will change for our customers.

Using Sale Proceeds From T1 Holdings

Similar to your stock holding, you can sell the T1 holdings (stocks bought the previous day and yet to be credited to your Demat) and use the entire value of the proceeds to buy new stocks for delivery. But there is going to be a small change here if you want to use the proceeds from T1 holdings to trade F&O, you will be able to use only 60% of selling value. Check this to know more.

Intraday Profits Can Be Used For New Positions Only After It's Settled

Currently, you can use intraday realised profits for taking new positions on the same trading day. Going forward, you will be able to use it only after 2 days in case of equity/stocks and the next day in case of F&O. This is because the settlement cycle for equity is 2 days and 1 day for F&O, which is when the profits get credited to your account from the exchange only then. So intraday equity profits earned on a Monday can be used to trade more only on Wednesday, and intraday F&O profits earned on Monday can be used to trade more only on Tuesday.

Option Sell Credit Can Be Used Only To Buy Options On The Same Trading Day

When you exit your long/buy option positions or enter new write/short options, the proceeds or credit of option premium can be used for only new long/buy option trades on the same trading day and only within the same segment (proceeds from equity options can’t be used for currency or vice versa). You can use this proceeds or option credit for all other types of trades only from the next trading day.

Intraday Leverages For Now Remain 

The way it before note that the account balance on Console may not match with Kite balance as Kite balance will not include unrealized intraday equity profits until T+2 day, while Console will show balance including intraday profits.

If you have any follow on questions, post on this thread on Trading Q&A.



Free Equity Delivery and Direct Mutual Funds, Intraday and F&O 20 Rupees per Order

Trading and investing in:
  • Futures and Options
  • Commodity derivatives
  • Currency derivatives
  • Stocks & IPOs
  • Direct mutual funds
  • Bonds and Govt. Securities

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