Comment on Margins & Margin penalties when trading with leverage
commented on
20 Oct 2022, 09:56 AM
The short collection of upfront margin penalty is charged to the TM and not the the end client
It is the responsibility of the TM to inform the margin shortfall, just how the MTM loss is informed by means of Margin Statement mandated to be sent to the client on T day itself (which Zerodha never do), and give them an opportunity to replenish it by T+1 day. But TM didn’t establish any such mechanism to inform the shortfall and continued to pass the penalty levied on them to its client.
And most importantly,
Why NSE is favoring the broker by asking them to refund such penalty charges if charged only after Oct 11, 2021 and not from the time it came into effect which is July 31, 2020?
Why NSE is asking the investor/trader community to pay for the penalty levied on the broker?
NSE/INSP/45191 – July 31, 2020
“Member cannot pass on the penalty w.r.t. short collection of upfront margin to client.”
NSE/INSP/49929 – Oct 12, 2021
“This has reference to Exchange Circular NSE/INSP/45191 dated July 31, 2020 with respect to “Guidelines/clarifications on Margin collection & reporting” wherein it was clarified that the members cannot pass on the penalty w.r.t short collection of upfront margin to client. However, Exchange has observed that certain members are passing on the penalty levied by clearing corporations on account of “short/non-collection of upfront margins from clients” to respective clients.
In view of the above, it is reiterated that 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.”
NSE/INSP/53525 – Sept 02, 2022
“This has reference to Exchange circular NSE/INSP/45191 dated July 31, 2020 wherein it was clarified that the members cannot pass on the penalty w.r.t short collection of upfront margin to client. Further, it has been reiterated again vide Exchange circular SE/INSP/49929 dated October 12, 2021 that 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.”
“Members are advised to refund the penalty levied by clearing corporations on account of “short/non-collection of upfront margins” to the clients on an immediate basis if same has been passed on to the clients after 11th October, 2021.”