Policies and procedures

1. Demat account

1. a. On opening an account with Zerodha, a demat account and a trading account in your name shall be opened and operational with Zerodha. Zerodha opens demat accounts under Zerodha’s own depository participant registration.
2. b. Demat accounts opened prior to September 15, 2015, will be held with IL&FS Securities Services Ltd, and clients were required to switch their demat account from IL&FS to Zerodha in 2018. If you have not transferred your demat account, certain features may not be available to you.
3. c. Transfer of shares from a third-party demat account into Zerodha’s pool account and subsequent selling of such stocks are not allowed.
4. d.Zerodha will maintain all client securities in a designated account called the Client Beneficiary Account. The securities of Zerodha will be kept in a separate demat account termed as Zerodha Beneficiary Account. The clients’ and Zerodha’s own securities will not be mixed with each other.
5. e.All securities purchased by you shall be transferred to your demat account by T+1 day.
6. f.If you purchase securities but fail to fully pay for these, a limited period pledge for seven trading days is created in favour of Zerodha, via the Clients Unpaid Securities Pledgee Account (CUSPA). You will then be notified by email to deposit funds into your Zerodha account, or sell your holdings, to meet the debit obligations. If you fail to meet your debit obligations, Zerodha will sell the stock to cover the outstanding debit balance.
7. g.You can view your demat account balance directly on the depository website.

2. Trading

Client trades shall be carried out under the respective unique client code only. The Client shall be the only person/entity with access to its trading and demat account. Any sharing of user credentials is not permitted. The Client shall be solely liable for any losses arising from misuse of its user credentials, and Zerodha shall not be liable for any error or misuse of the client while placing a trade.

3. Zerodha charges

1. a. Refer to this page for our updated charge list.
2. b. The Client agrees to pay Zerodha all brokerages, transaction charges, commissions, fees, GST, and other taxes or levies, by whatever name so called, as informed to the Client by Zerodha from time to time in writing. Zerodha shall be entitled to deduct such fees or levies from the Client’s account or trading ledger, in lieu of the services received by the Client from Zerodha.

4. Penalties

5. Funds

Payin and payouts on Zerodha’s Platforms are as follows:

Payin:

1. a. Clients can transfer funds into the Trading Account only from such bank account(s) that are registered with Zerodha on the Platform. Any transfer from a non-registered bank account will not be considered and the client does not get any trading credit for such transfers. Clients shall be solely liable for any losses due to transferring funds from a non-registered bank account.
2. b. The client can transfer funds using UPI, from the instant payment gateway facility available on the trading platform, and through IMPS, RTGS and NEFT.
3. c. Payments using UPI are free. Payments through instant payment gateway will be charged at ₹9 + GST per transfer. Payments through NEFT/RTGS/IMPS are free at Zerodha’s end, and may be chargeable by Your bank.
4. d. Payments cannot be made via cash, cheque, or DD.
5. e. For more payin details, click here.

Payout:

1. a. All payout requests will have to be placed on the Kite web or app platform, or on Console. All payout requests will be processed electronically and the credit will be to the client’s primary bank account within 24 hours of processing the payout request.
2. b. Withdrawal requests for Equity/ F&O/Currency will be processed at 10:00 PM on working days, 4:30 PM on Saturdays, and on the next day if the request is placed on Sundays and public holidays (i.e. cut-off times). If you place a withdrawal request before 10:00 PM/4:30 PM as the case may be for weekdays and Saturdays respectively, the money will be credited to your account within 24 hours of the cut-off times. If you place a withdrawal request after 10:00 PM/4:30 PM as the case may be for weekdays and Saturdays respectively, it will be processed on the next working day and you will receive the funds within 48 hours of the cut-off time.
3. c. The payout window for Commodities is 8:00 AM on weekdays and 4:00 PM on Saturdays - requests placed before 8:00 AM or 4:00 PM as applicable will be processed within 24 hours of the cut-off times. Requests placed after 8:00 AM or 4:00 PM as applicable will be honored within 48 hours of the cut-off time.
4. d. Funds added to your trading account on the day cannot be withdrawn on the same day.

6. Commodities

General

1. a. Physical delivery of commodities is not allowed by Zerodha.
2. b. Commodities with staggered delivery will be closed 5 trading days prior to the expiry date in order to avoid physical delivery. Further, commodities with compulsory delivery will be closed a day before their respective delivery intention periods.
3. c. On the start of the delivery intention period, clients will not be informed before closing any open positions to avoid compulsory delivery. Clients are advised to close their positions well in advance.
4. d. For Commodities, once the delivery intention period begins, no contract will be available under MIS or CO product type.
5. e. MIS trading is not available on currency options.
6. f. Trading in MCX contracts will be banned a day prior to the delivery intention period.

Risks

The risks pertaining to commodity options that devolve into futures on expiry are as below:

1. a. All open options contract will be devolved into futures on the expiry date of the options contract.
2. b. The strike price of the devolved options contract is the buy average for take delivery or the sell average for give delivery of the futures contract.
3. c. The exchange blocks a margin equivalent to 25% of the margin required to hold the devolved future contract 2 days before expiry, 50% of the margin, 1 day before expiry, and 100% of the futures’ margin for devolvement.
4. d. Failure to produce the margin in the trading account can lead to a square-off of open positions at the discretion of Zerodha.
5. e. The margin block will be applicable for contracts part of the exchange’s sensitivity report.
6. f. Zerodha may also consider imposing additional margin requirements apart from the ones described above from time to time.

7. Orders and instruments

1. a. Cover Orders (CO) are currently available for NSE/CDS Equity, and typically the margin benefit under this is higher relative to MIS positions. COs are not available for stock options and on BSE. CO is not allowed pre-open for Equities.
2. b. Basket orders will not be allowed on penny stocks.
3. c. Because of the illiquidity of stock options contracts, market orders have been disabled on stock options. Only limit and stop loss orders are allowed. Place a limit buying order higher than the current price or selling order below the current price, this will act as good as market order but will also protect from any impact cost due to illiquidity.
4. d. Due to exchange imposed member level open interest restrictions, not all strike prices for option contracts may be available for trading in overnight NRML trades. Know more.
5. e. Instruments available for trading at Zerodha are subject to the discretion of Zerodha’s risk management team, and these may change from time to time for various reasons.

8. Square-off timings

1. a.
   Intraday products (MIS/BO/CO) square-off timings:

   Item	Equity/Cash	Equity derivatives	Currency futures	Commodity
   Intraday Margin Time (MIS and CO)	3:20 PM onwards	3:25 PM onwards	4:45 PM onwards	25 minutes before Close

2. b. Note that intraday square off timings can change based on the discretion of Zerodha.
3. c. The Client is solely responsible for squaring off all open positions within these times.
4. d. If any intraday position or an MIS trade is not squared off on the same day due to any reason, including link or system failure or any risks associated with internet/wireless-based trading which may occur at the end of the Client, Zerodha or the respective Exchange, it shall be treated as a Cash and Carry ("CNC") or NRML position and carried forward to the next trading day. In case such a situation arises, the onus of squaring off the position will be on the Client.
5. e. Our RMS desk shall square off any such position, without the requirement of a margin call, if the necessary cash is not available in the Client's account, at the discretion of Zerodha. There may be no calls or intimation from Zerodha. A charge of ₹50 + GST will be applicable for all positions squared off by our RMS desk, including auto square off.
6. f. All BO, CO and MIS positions will automatically be squared off at the end of the each trading day.

9. Margins

1. a. Comprehensive real-time margins at Zerodha can be viewed here.
2. b.
   The margin policy for the various products is mentioned below:

   1. NSE/BSE Equity: Zerodha, by policy, does not provide margin for equity delivery trades. The client should have enough money in his trading account to take delivery of shares, failing which Zerodha can cut the position.
   2. NSE/BSE Futures and Options: Margin can be provided to Clients only by Clients pledging securities. The leverage provided here is subject to market conditions and changes in its proportion are dynamic. Further, option premium received from writing options will not be considered as cash/capital.
   3. MCX Commodities: Intraday/MIS trading is allowed in all non-agri products except the Brent Crude and Silver 1000. The leverage provided is subject to market conditions and changes in its proportion are dynamic. Zerodha blocks only SPAN margin for overnight positions on commodities.
   4. The exchange has offered a provision for brokers to collect an Additional Margin of 5%, which Zerodha has chosen not to collect at its own discretion and passed on the benefit to its clients.
3. c. Please note that Zerodha does not engage in the business of Client Funding. Clients are required to have sufficient balance in their accounts to hold/carry forward positions.
4. d. The Client shall also be furnished with a copy of the daily margin status fpr the days that the Client has traded, and is also available on Console.
5. e.
   Collateral margin:

   1. Collateral margin can be seen under ‘Funds’ - ‘Collateral’ on Kite (Web/mobile), and Console.
   2. For all pledge requests placed and authorised before 7:00 PM, the collateral margin will be available to trade on T+1 day (the next working day). All requests placed after 7:00 PM will be processed only on the next working day.
   3. Margins will be provided after the applicable haircut. You can click here for the applicable haircut on various stocks. For example, a haircut of 10% would mean that if you pledged stocks worth Rs 1 lakh, Rs 90,000 (90% of 1 lakh) will be added as collateral margin to your trading account.
   4. You will be able to use this entire margin after haircut for taking intraday or overnight positions in futures, and for writing options of equities, indices, and currencies. You will not be able to use this margin to buy options or take further positions in the equity segment.
   5. All delayed payment (interest) charges accumulated will be debited once a month on the ledger on Kite/Console. A link to see cumulative delayed payment (interest) charges calculation can be found on the Holdings page.
   6. All pledged stocks are marked as pledged in the client's demat account until they are unpledged. The process of pledging will cost ₹30 + GST per instrument irrespective of the quantity, and there is no charge for unpledging shares. This charge will be debited from your ledger the day the pledge request is processed.
   7. You will continue to get the benefits of all corporate actions like dividends, splits, bonuses, etc. on the stocks you have pledged.
   8. Pledging is available only for those clients who have opened a demat account through Zerodha with PoA duly mapped to Zerodha, or authorise the pledge request on CDSL through OTP.
   9. Zerodha reserves the right to liquidate any stock in case a debit arises and remains unpaid by the client.

10. Closing your account

1. a. A Client account can be closed upon a specific request from the client. The request can be raised as mentioned here.
2. b. The closure shall be effective after a period of seven working days from the date of application/intimation or the date of settlement of accounts, whichever is later.
3. c. Settlement of account shall mean that there is no outstanding balance of shares or funds in the books of the client with Zerodha, and the same is confirmed by the Zerodha. The date of confirmation shall be the effective date of settlement.
4. d. When there is no trading activity for 12 consecutive months in an account, exchanges consider the account inactive. We do not close such dormant accounts. Instead, the Client is required to re-verify KYC details as part of Zerodha’s additional due diligence measures. Post re-verification, the account can be used by the Client.
5. e. We reserve the right to reject fresh applications to open an account to an individual who frequently closes and re-opens accounts on any grounds.

11. Internet-based trading

1. a. Zerodha is permitted to offer trading via online platforms, and adheres to SEBI’s regulations for internet based trading (IBT).
2. b. Zerodha will share your user ID with you, and you will be able to set your own password. You are solely responsible to keep your Username and Password safe. You are solely responsible for any actions taken using your account, even if someone else does so without Your permission.
3. c. You understand and agree that using the internet for any purpose, including trading on Zerodha, is not 100% fool-proof and has risks. Trading online can have technology related interruptions and issues. Zerodha and the exchange do not represent or warrant that their services will always be available without interruption.
4. d. Zerodha shall not be liable for any actions taken through your account, whether authorised or not, and for any losses or damages (real or notional) arising out of the suspension, interruption, non-availability or malfunctioning of Zerodha’s IBT system, the Exchange’s service or systems or non-execution of his orders due to any link / system failure at the Client/Zerodha/Exchange end for any reason beyond the control of Zerodha/Exchange.

12. Risk disclosure

1. a. You understand that trading in equity, derivatives contracts or other instruments traded on the Exchange have a varying element of risk and may not be appropriate for someone of limited resources/limited investment and/or trading experience and low risk tolerance.
2. b. You acknowledge and accept that there can be no guarantee of profits or no exception from losses while executing orders for purchase and/or sale of a derivative contract being traded on Exchanges.
3. c. In case you trade on the Exchanges and suffer adverse consequences or loss, you shall be solely responsible for the same and Zerodha/ the stock exchanges and/or SEBI shall not be responsible, in any manner whatsoever, for the same.
4. d.
   The following are illustrative basic risks of trading:

   1. Higher volatility: Higher volatility means prices of securities can change a lot. When you trade, your order might not be fully executed, or the price at which your order is executed could be very different from what you expect, leading to losses.
   2. Lower liquidity: Some securities might not have many buyers or sellers, making it harder to trade them quickly or at a price you expect. This could lead to partial execution of your order, a bigger difference in price, or no execution at all.
   3. Wider spreads: The spread is the difference between buying and selling prices. Less liquid securities can have wider spreads, which means you might pay more when buying or receive less when selling.
   4. Risk-reducing orders: Stop loss or limit orders may not be effective, as rapid movement in market conditions may make it impossible to execute such orders.
   5. System risk: Trading can be very busy at opening, closing, or any time during the day. This could lead to delays in executing or confirming orders. Trading may also stop temporarily if there are unusual events or technical issues.Trading uses technology, and there could be problems such as communication failures, slow responses, or system glitches. This might delay or prevent your orders from being processed.

1. Background

SEBI vide circular dated 18th January 2006, along with all its updates, requires all ‘Market intermediaries’ to lay down a policy framework for anti-money laundering measures to be followed. EBI has also issued a Master circular dated 19th December 2008, which consolidates all the requirements/obligations issued with regard to AML/CFT, last updated on February 3, 2023. Zerodha Broking Limited (hereinafter “Zerodha”) being a Stock Broker and therefore a market intermediary, is required to adhere to the Master Circular.

2. Objective

The objective of this PMLA policy is to have a system in place for preventing any money laundering financial transactions through Zerodha, and to identify, monitor, and report any such transaction to appropriate authorities.

“Know Your Customer “(KYC) is the guiding principle behind the Anti-Money Laundering (AML) measures. It incorporates the “Know Your Customer” Standards & “Anti Money Laundering” Measures, hereinafter to be referred to as “KYC Standards” and “AML Measures". The objective is to have in place adequate policies, practices and procedures that promote high ethical and professional standards and prevent Zerodha from being used, intentionally or unintentionally, by criminal elements. KYC Standards and AML Measures would enable Zerodha to know/ understand its customers, the beneficial owners, the principals behind customers who are acting as agents and their financial dealings better which in turn will help Zerodha manage its risks prudently.

The management of the company is fully committed to establish appropriate policies and procedures for ensuring effectiveness and compliance concerning all relevant legal requirements, and undertakes to periodically review the policies.

3. Regulatory requirements

Roopa K V is the Principal Officer responsible for ensuring the proper discharge of all legal requirements and for:

1. Compliance of the provisions of the PMLA and AML guidelines
2. Acting as a central reference point and play and active role in identification & assessment of potential suspicious transactions
3. Ensuring that Zerodha discharges its legal obligation to report suspicious transactions to concerned authorities.

This policy is in relation to customer due diligence, which means:

1. Obtaining sufficient information about the client to identify who is the actual beneficial owner of the securities or on whose behalf transaction is conducted
2. Verify the customers identity using reliable independent source document, data or information
3. Conduct on-going due diligence and scrutiny of the account/ client to ensure that the transaction conducted are consistent with the clients’ background/ financial status, its activities and risk profile.

The customer due diligence process includes three specific parameters:

1. Policy for acceptance of clients: Each client should be met in person or complete KYC must be done online. No account may be opened in a fictitious/benami name or on as an anonymous account.
2. Suspicious transaction identification and reporting: Any unusual activity compared to past transactions of a client, sudden activity in dormant accounts, or a sudden increase in volume or value transactions is classified as suspicious transactions. These shall be reported to the SEBI and any other person as laid down in applicable law.
3. Central Depository Securities Limited (CDSL) communique no. CDSL/OPS/DP/POLCY/2017/176 dated April 05, 2017 and CDSL/OPS/DP/POLCY/2017/354 dated July 18, 2017, and all other applicable regulations advise that beneficial owners should submit/update their Aadhar with the their Depository Participant. Please ensure that you update your Aadhar with Zerodha as per these applicable regulations.

4. Client identification

Before opening any account with us, the following measures shall be taken:

1. a. In-person or complete online KYC verification of the client,
2. b. Identify beneficial ownership and control, i.e., determine the persons who beneficially own/control the account,
3. c. Collect information about the Client's background, and occupation and also determine the introducer, if any,
4. d. Collect and verify all original documents from the client,
5. e. Collect a certified copy of valid documents showing details of his permanent address, current address, PAN, nature of his occupation, and financial status and a recent photograph,
6. f. For clients trading in F&O segment, documentary proof of his financial details will be collected, determined by policies from time to time,
7. g.
   Corporate clients:

   1. Collect copies of the certificate of incorporation, the memorandum of association and other documents required by SEBI, and
   2. collect adequate information of the persons authorised to deal on behalf of the company.

5. KYC updating process

1. a. All corporate clients must submit their annual report to Zerodha every year.
2. b. In the case of individual clients, each Client’s master details shall be sent to the client, who will then confirm that the details are updated correctly, or shall revise or provide details as required. He shall also specify his present occupation and financial income details per annum in the same declaration.
3. c. No account shall be opened if the client is unable to or refuses follow the KYC related required.
4. d. The information shall be adequate to satisfy competent authorities (regulatory/ enforcement authorities) in the future that due diligence was observed by Zerodha in compliance with the Guidelines.
5. e. Failure by a prospective client to provide satisfactory evidence of identity should be noted and reported to the Principal Officer.
6. f. Further, Zerodha should follow up with clients where inconsistencies in the information provided are found, until the client corrects the inconsistencies or provides reasonable proof for the same.

6. Client categorisation

1. a. Each client will be marked into 3 categories, High Risk, Medium Risk and Low Risk from the point of view of the anti money laundering laws. The categorization will be made based on the following parameters/ factors of risk perception: nature of business activity, trading turnover per fay, manner of making payments on Zerodha’s platforms, etc. Zerodha shall internally mark the risk category of each client, and high-risk clients will require regular KYC updates as determined by Zerodha.
2. b. Risk profiling may also vary for high net-worth individuals, trusts, non-profits, charitable organizations, and companies with close family shareholdings.
3. c. As a general rule, clients who make payments on time and take delivery of shares may be considered low risk.

7. Suspended Persons

SEBI and other authorities suspend or debar persons / entities from participating in the securities market on several instances. Zerodha as a broker are required to ensure that such persons do not trade through us, and shall not be liable for any such blocking or closure of accounts.

8. Role of Compliance Team & Internal Audit:

1. a. The compliance team will play an important role in ensuring compliance of the above policies and procedures. The account opening team will exercise adequate due diligence while onboarding clients. There will be periodic checking by the Principal Officer and the same report will be properly filed by Zerodha.
2. b.
   Here is a system of concurrent audit, which will also include ensuring compliance of the

   1. Due diligence in KYC norms.
   2. Generation of exception reports
   3. Trading in dormant client codes
   4. Level of awareness of staff

9. Risk Management

1. a. Zerodha follows a risk based approach for mitigation and management of any identified risk. Zerodha monitors its policies and may enhance policies if necessary.
2. b. Client due diligence is undertaken on a risk sensitive basis.

10. Transaction monitoring

1. a. Zerodha has undertaken measures to understand the normal and standard activities of each client, to be able to understand deviation sin transaction and activities.
2. b. Zerodha shall specifically note complex and unusually large transactions / patterns which appear to have no economic purpose.
3. c. Zerodha shall ensure retention of records as required under the PMLA and all other applicable laws.

11. Illiquid Securities

The Exchanges specifies a list of Illiquid Securities wherein higher due diligence is to be exercised by brokers. The list is displayed on the Zerodha website for the client's information. The trade pattern in such scrips by our clients is monitored. We may seek clarifications or justifications from the client in case of a high volume of trades in any scrip compared to the exchange volumes.

12. Employee Training

Zerodha has a policy for ongoing employee training so that the staff of Zerodha are always aware of the provisions of AML and CFT procedures and amendments thereof. These training programmes are focused on our customer support staff, back office staff, compliance staff, risk management staff and staff dealing with new customers as it is very crucial that all those concerned fully understand the rationale behind these guidelines, obligations and requirements, implement them consistently and are sensitive to the risks of their systems being misused by unscrupulous elements. A register of attendance of participation in such education and training programs is maintained as records, kept secured with the Compliance Department.