Policies and procedures

Funds

System of Payin and Payout of funds:

Payin: Clients can transfer funds into the Trading Account only from such bank accounts which are registered with Zerodha. Any transfer from a non-registered bank account will not be considered and the client does not get any trading limit credit for such transfers.

The client can transfer funds from the instant payment gateway facility available on the trading platform or on the backoffice. Such transfers will be charged at Rs 9/- per transfer.

If a client chooses to transfer using NEFT or by means of cheque, there will be no cost.

If the client transfers funds via cheque, the details of the transfer along with a copy of the cheque should be made available to Zerodha for the credit to be updated on the trading account.

Payout: All payouts will have to be compulsorily placed on the Backoffice access provided to the clients. All payout requests will be processed electronically and the credit shall come to the client’s primary bank account within 24 hours of having processed the payout request.

Withdrawal requests for EQ/Currency will be processed at 8:30 PM on working days. If you place a withdrawal request before 8:30 PM, the money will be credited to your account the next bank working day.If you place a withdrawal request after 8:30 PM, it will be processed on the next working day and you will receive the funds in 48 hours.

The payout window for Commodities is 9:00 AM every day - requests placed before 9:00 AM will be honored on the same day. Requests placed after 9:00 AM will be honored the next day.

Payout windows are closed on Saturday and Sunday - this means if you place a request on Saturday or Sunday or after 8:30 PM on friday, it will be honored only on Monday.

Note

• A Call & Trade charge of Rs. 20 is applicable for positions squared of due to insufficient funds.
• Please be advised that a Call & Trade charge of Rs. 20 plus GST will be applied for all OFS, Buyback and Takeover orders placed through Zerodha.
• Option premium received from writing options will not be considered as Cash/Capital.
• MIS is not available on currency options.
• Cover Order is not available for stock options.
• Positions which do not have sufficient funds can be cut any time at the discretion of our RMS desk. There will be no margin calls or intimation from our RMS desk.
• Any open positions can be squared off at the discretion of our RMS desk If the funds available in your account are short of exchange specified margins. There will be no margin call before the position is squared off. During times of extreme volatility, the loss could be more than the funds available in your account before the position is squared off. All resulting charges or debts that might occur from such square offs will have to be borne by the client.
• Collateral margin will not be considered for equity delivery positions.
• Leverage varies between NOW and Zerodha Trader with the latter allowing higher exposure.
• All BO, CO and MIS positions will automatically be squared off at the end of the each trading day.
• Trading in mcx contracts will be banned a day prior to the delivery intention period.
• Zerodha blocks only SPAN margin for overnight positions on commodities. 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.
• Basket orders will not be allowed on penny stocks.
• Basket Orders will be allowed only on orders which are over Rs. 25,000 in turnover per leg.
• AMO (After-Market Orders) will be allowed only if the value of each order is above Rs. 25,000.
• AMO will be cancelled if the price entered is more than 10% away from the LTP in either direction.
• Fines levied by the exchange for short margin will be payable by the client.
• Clients will have to ensure all Co, Mis, and intraday products are closed by the EOD.
• BO and CO is not allowed in preopen for Equities.
• Payments will only be accepted from the client’s registered bank account, cash and DD payins are not accepted.
• Commodities with staggered delivery will be closed 10 days prior to the delivery date in order to avoid physical delivery, also commodities with compulsory delivery will be closed a day before their respective delivery intention periods.
• On the start of the delivery intention period, clients will not be informed before closing any open positions to avoid compulsory delivery notice. Clients are advised to close their positions well in advance.
• For Commodities, on the start of delivery intention period, no contract will be available under MIS or CO product type.
• Physical Delivery of Commodities is not allowed.
• Because of illiquidity of stock option contracts, market orders have been disabled on stock options. Only limit 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.
• Instruments available for trading at Zerodha are subject to the discretion of the risk management team, and these may change from time to time for various reasons.
• Stocks and scripts which are currently in the derivatives (including Futures & Options) segment and they fail to meet:
  (I) the Eligibility Criteria (specified vide SEBI Circular number CIR/DNPD/3/2012 dated July 23, 2012) for a continuous period of three months; and
  (II) the Enhanced Criteria (specified vide SEBI Circular number SEBI/HO/MRD/DP/CIR/P/2018/67 dated April 11, 2018),
  shall be physically settled.
  With reference to the above two stated Circulars along with any further updates regarding the same from SEBI or any Exchanges from time to time, where stocks/scripts which fail to meet both such Eligibility Criteria and Enhanced Criteria, Zerodha’s policy on settlement with respect to such stocks can be read here.

All information mentioned here is subject to change at the discretion of our Risk management team.

Debit balance

Delayed payment charges

Zerodha follows the practice of posting the settlement obligation towards their transaction in the client ledger on the settlement date. All clients are advised to make the payment before the pay-in time on the settlement day, though there are instances wherein client may delay the payment beyond the settlement date. Although, it is obligatory for a broker to meet the settlement obligation in time, therefore, in order to ensure timely receipt of funds from clients towards their payment obligation, “charges for delayed payment” are levied in the client’s account. The sum towards “charges for delayed payment” is levied to discourage delayed payment from clients who do not deposit the required sum of money before the payin time on the payin day. “Charges for delayed payment” are levied on the respective ledger debit of the clients at a rate of 0.05% per day of the debit balance in the account. For the purpose of reckoning debit balance, the debit balance in the client ledger is consolidated across all segments of the respective exchange after giving effect to the release of margin.

Charges on FO position

In the Equity Derivative Segment and Currency Derivative Segment, we accept the approved securities from clients for margin purpose. Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin. If you don’t have enough cash, your account will be in debit balance and there will be an interest charge also called delayed payment charges of 0.05% per day applicable on the debit amount. So assume you take positions that require a margin of Rs 1 lakh, you will need at least Rs 50,000 in cash irrespective of how much collateral margin you have. Assuming you don’t have this Rs 50,000, whatever you are short by will be the debit balance for the day, and interest will be applicable for that amount. Liquid bees are considered as cash equivalents by the exchange, so the above 50% rule wouldn’t apply. So margin received from pledging liquid bees will be as good as having cash in your trading account. Check this blogpost if you have any queries regarding pledging.

Zerodha PMLA Policy

Anti Money Laundering Measures

Background

The Prevention of Money Laundering Act, 2002 came into effect from 1st July 2005. Necessary Notifications / Rules under the said Act were published in the Gazette of India on 1 st July 2005 by the Department of Revenue, Ministry of Finance, and Government of India.

SEBI vide circular dated 18th January 2006 required Market intermediaries to lay down policy framework for anti money laundering measures to be followed. Zerodha being a Stock Broker needs to adhere to the same. SEBI has also issued a Master circular dated 19th December 2008, which consolidates all the requirements/obligations issued with regard to AML/CFT until December 15, 2008

Objective

Money laundering has now become one of the major concerns of international financial community. Money Laundering is not just an attempt to disguise money derived from illegal activities. Rather, money laundering is involvement in any transaction or series of transactions that seek to conceal or disguise the nature or source of proceeds derived from illegal activities, including drug trafficking, terrorism, organized crime, fraud and many other crimes.

The objective is to have a system in place for preventing any money laundering financial transaction through us and also to identify, monitor, 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 as “KYC Standards” and “AML Measures ". The objective of is to “have in place adequate policies, practices and procedures that promote high ethical and professional standards and prevent the Company from being used, intentionally or unintentionally, by criminal elements ". KYC Standards and AML Measures would enable the Company 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 the Company to manage its risks prudently

The management of the company is fully committed to establish appropriate policies and procedures for ensuring effectiveness and compliance with respect to all relevant legal requirements.

1. Client identification

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

• In person verification of the client
• Identify beneficial ownership and control, i.e., determine the persons who beneficially own / control the account.
• Collect information about client's background, occupation and also check the name of the introducer.
• Collect and verify all original documents from the client.
• Collect a certified copy of valid documents showing details of his permanent address, current address, PAN, nature of his occupation, financial status and also a recent photograph.
• For clients trading in F&O segment, documentary proof of his financial details will be collected.
• In case of Corporate client, collect copies of certificate of incorporation, Memorandum of association and other documents as required by SEBI
• In case of Corporate client, collect adequate information of the persons authorised to deal on behalf of the company.
• The client shall be interviewed personally regarding the purpose of opening the account i.e., whether short term trading or long term investment.
• Prior experience in stock market
• Introducer details

3.Client categorisation

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:

• High Networth Clients
• Trusts/ NGOs / Charities receiving donations
• Companies having close family shareholdings (The above are considered of High Risk as per SEBI guidelines) The other parameters are nature of business activity, trading turnover, manner of making payment etc. Provision will be made in the back office software for noting categorization of each client. The high-risk client will require regular KYC update.

The clients will be placed under low, medium and high-risk category based on their turnover per day. Corporates / HNIs having respectable social and financial standing, Clients who make payment on time and take delivery of shares can be considered as Low

6. Employee Training

We have policy for ongoing employee training programme so that the total staffs of our company completely aware of the provisions of AML and CFT procedures and amendments thereof. These training programmes are totally focused for frontline 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, if there is any lapse on the part of any staffs of the company.

A register of attendance of participation in such Education/ training program is maintained for the employees, kept secured with the Compliance Department.

As resolved Zerodha shall take adequate measures as per its internal policy to prevent money laundering and shall also put in place a frame work for PMLA policy. The policies and procedures as mentioned above shall not be final as it may adopt additional measures to safeguard its interest with respect to activities associated with PMLA.

Never pay high brokerage again. Trade at 20 only

Since last December Zerodha has gone zero brokerage for Equity Delivery trades. Yes, EQ delivery is free. For other trades like EQ Intraday, F&O, Currencies and Commodities, you pay a simple 0.01% or 20 per executed order (whichever is LOWER) as a transaction fee regardless of your trade size. This is our way of simplifying things. To reiterate, you pay only 0.01% or 20 per executed order that you place, irrespective of how many trades are executed for that particular order.

For example: You place an intraday ‘buy’ order for 300 shares of Reliance. This order may get executed at different times until the whole 300 are bought. However, we at Zerodha charge you only for the order that you placed, irrespective of how many trades it takes to complete the order. The same charges apply for trading intraday or Futures & Options.

To know more: http://www.zerodha.com/pricing

Other Charges:

• Account opening (Trading & Demat) – ₹ 300 (Market rates are Free to ₹ 1500)
  Account opening (only trading) – ₹ 200
  Account opening (only commodities) – ₹200
  Note: Please go through the 'Refund & Cancellation Policy', to have a complete understanding of the refund rules and procedures.
• Annual Maintenance Charges for Demat (payable at the end of the year) – Rs 300 (Market rates are Rs 300 to Rs 1000) Annual Maintenance Charges for Trading Account - ZERO If you print your own forms through our website, we give you a discount of Rs. 100 on Account Opening Charges.
• DP Charges – Rs 8 (Zerodha) plus Rs. 5.5 (CDSL) (applicable only when you are selling your Delivery position after having held for more than two days). (Market rates are usually between Rs 12 to Rs 25)
• STT, GST, NSE Turnover and Transaction Charges, SEBI charges are all as applicable market-wide
• GST will be levied additionally on all charges mentioned in this document as and wherever applicable.

Margins:

• Intraday Margins for Cash: 4 – 20 times for F&O stocks. No margins for any other stocks. For Delivery positions, 100% cash will be required *square-off of all intraday CASH positions if not converted happens at 3:20 p.m. every day
• Intraday Margins for Futures using MIS product code: 50% of the total margin (SPAN plus Exposure) from NSE. Using Cover or Bracket orders gives higher leverage. For holding Futures overnight, exchange stipulated margins are required. *square-off of all FUTURES & OPTIONS positions starts at 3:20 p.m. every day if you don’t have the requisite margin.

Alternative Means of Communication in Case of L/L Failure in Internet

There are 2 types of trading backup system/processes planned for handling the subject i.e. 'Call and Trade' desk at HO and dealer desk located in branch locations. All successfully registered clients would be provided with Call and trade numbers and the clients would have to call us on these numbers and authenticate their account information before the dealer can place trades.

All clients on any issue in internet or connectivity failure or in any other difficulty can call on the nation wide accessible number to receive 'Call and Trade' service. After successful authentication i.e. manual authentication after providing personal identification details to call and trade dealer, clients can access their account as required. Clients being served at dealing desk can access their accounts with help of dealers at these locations.

Additional charges of ₹20 per executed order:
A) for orders placed through our support/dealing desk.
B) intraday (MIS/BO/CO) positions squared off before market closing by our RMS team.

Note: Trading using our Call & Trade desk involves many uncertain factors which include complex hardware, software, systems, and communication lines. These are susceptible to interruptions.

Business continuity

Document control information

Business continuity management

Information security aspects of business continuity management

• A managed process must be developed and maintained for business continuity throughout the organization that addresses the information security requirements needed for the organization’s business continuity.
• A comprehensive Business Continuity Plan (BCP) must be developed and implemented in order to maintain or restore business operations in the required time scales following interruption to, or failure of, critical business processes. The BCP must include effective Disaster Recovery procedures for quickly recovering from an emergency with minimum impact to the company’s operations.
• Business Continuity Plan must be developed based on critical business processes and the likely disruptive events along with their probability, impact and consequences for information security identified through Business Impact Analysis.
• A single framework of business continuity plans must be maintained to ensure all plans, across businesses and processes are consistent, to consistently address information security requirements, and to identify priorities for testing and maintenance.
• Zerodha Servers are located in Netmagic Tier-3 Datacenter at Mumbai.
• At present we have Production server and Backup server in place and both were Sinked together to get the data updated in the backup server on real time. Also the data is backed up through storage folder in a secured way, one copy of backup on same server itself, other copy in backup server & external media devices. Even we will take the backup of SQL database on daily basis and store it securely.
• In case of primary server failure then alternate communication will be carried from the secondary server and will continue the trading platform.

Proprietary notice

This document contains confidential information of Omnesys Technologies Pvt Ltd, which is provided for the sole purpose of permitting the recipient to evaluate the deployment document submitted herewith. In consideration of receipt of this document, the recipient agrees to maintain such information in confidence and to not reproduce or otherwise disclose this information to any person outside the group directly responsible for evaluation of its contents, except that there is no obligation to maintain the confidentiality of any information which was known to the recipient prior to receipt of such information from Omnesys Technologies Pvt Ltd, or becomes publicly known through no fault of recipient, or is received without obligation of confidentiality from a third party owing no obligation of confidentiality to Omnesys Technologies Pvt Ltd.

Refund & cancellation policy

The Refund & Cancellation policy for all payments made towards account opening using the payment gateway shall stand as under:

• The Fees paid towards account opening charges for enabling equities as well as commodities is non-refundable.
• Pick up of required documents related to the account opening procedure is subject to availability of our representatives, given at any particular time and location.
• In case your account has not been opened by Team Zerodha, after the tenth day passing by from the day of collection of all necessary supporting documents and receipt of all due authorizations from you, you may request for a full refund of the charges as paid by you towards account opening.
• In case you have paid the charges relating to account opening multiple times, please create a ticket here and we will initiate the necessary procedure to refund your money.

Note: The completion of the refund procedure is subject to agencies such as banks, payment gateways.

CSR policy