Comment on Zerodha - Margin Policies

Nithin Kamath commented on 12 Jun 2014, 01:20 PM

Ashish, presently we are accepting only stocks and ETF’s. Yes we will start mutual funds very soon.

this is how it works for stocks and ETF’s

Zerodha gives margin to its clients for the securities held in their demat account. The way it works is, the shares would move from your beneficiary account to our (Zerodha) beneficiary account through an Off-Market transfer which you have to initiate and in turn these stocks would be moved to the margin account. We would then provide you margins against these shares after considering NSE VaR margins and your limit would be enhanced on your trading platform. Whenever you wish to not receive these margins, you can just send us an email request to withdraw the securities held in our beneficiary account and we would in turn move them to your beneficiary account. The whole process would cost you Rs 60/- per line item regardless of the size of your transfer/scrip.

Please note that at all times you would continue to remain the owner of the securities that you have transferred and hence would be eligible for all corporate benefits, whatsoever. Such corporate benefits would be passed on to you.

Please note that Collateral Margins can be used only to take positions in F&O Segment and not any other segment. Every broker does this as a value-added service and not necessarily as a money making process. We understand that not all clients can bring in cash to trade and since securities are assets, we could give margin against such assets for the client to trade.

**To avail collateral margin facility on your holdings, you need to transfer the shares to our beneficiary account. As soon as the shares are transferred, you’ll get margin against those shares after the exchange prescribed haircut. For example, if you have stocks worth Rs. 100,000 in your account and if the exchange prescribed haircut is 15%, then the collateral value of your stocks will be Rs. 85,000.The Cash-Collateral proportion in your account for the position held by you will always be calculated in the ratio of 10-90. Accordingly, to utilize the entire 85,000 collateral benefit you will need to have a minimum cash margin of Rs.9444/- (85000*10/90).

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