Intraday leverages reduced across the board

January 2, 2020

Over the last 12 months, SEBI has been bringing in many additional rules and regulations that safeguard retail customers from any potential financial fraud at a brokerage firm. In this process, many ambiguities in earlier circulars are also being cleared out. While all these have been extremely tough on the brokerage industry in the short term, I think it is good for the ecosystem in the long run. 

The most recent circular from SEBI was on margin requirement when buying or selling stocks, which I had explained earlier on Z-Connect. I had explained that it wouldn’t affect our customers, but turns out, it does! NSE and BSE have both just put out guidelines and clarifications on margin collection and reporting in the context of this SEBI circular.

Basically, the clarification says that the entire initial margin — which is SPAN+Exposure for F&O, and VAR+ELM for equity, has to be collected upfront before taking a trade, even if it is an intraday trade (MIS, BO, & CO). These type of intraday products were being offered with additional leverage by the entire broking industry until now. This will have to stop going forward. 

What changes?

This means that, for a stock like Reliance, you would need VAR+ELM margin (12.5%) to take a trade. Hence the maximum intraday leverage that can be provided by any broker is this requirement of 12.5% or 8 times. Check this list to see the VAR+ELM margin requirement for all stocks. Going forward, for all intraday product types — MIS, BO, CO trades, the leverage will be the same which is the VAR+ELM margin. Nothing changes for CNC or equity delivery trades that will require full funds in the trading account before placing a buy order or having securities in your Demat account before placing a sell order. 

Similarly, to trade 1 lot of NIFTY futures, you would need the entire SPAN+Exposure margin = 11.5% = Rs 1.04 Lakhs to take a trade. And like I mentioned earlier, the margin requirement will remain the same even if you used intraday product types like MIS/BO/CO. Check our margin calculator to see the SPAN +Exposure margin which we also call as NRML margin or Initial Margin. 

While the minimum VAR+ELM requirement for stocks is new, the additional intraday leverage that all brokerage firms offered for F&O was due to the ambiguity on margin reporting which existed. Exchanges charge a penalty if there is no minimum SPAN+Exposure present in a client account at the end of the trading day when margins are reported. Since all reporting was done on an end-of-day basis, if brokers did offer higher intraday leverages, it wasn’t reported as long as positions were closed. Thus, there was no penalty and the client who would switch the brokerage firm just based on leverage was happy too. With this clarification, it is now black and white. No broker will be able to offer any additional intraday leverage on F&O. 

Who and how does it affect?

Traders who wanted that additional leverage for intraday are the ones who will be affected the most, but positively or negatively is debatable. While yes, every intraday trader craves for higher leverage to earn more, the reality is that trades can go either way. Higher the leverage, higher the chance of panic when trades go against you, and higher the odds of losing. At Zerodha, even though the competitive landscape forced us to offer additional leverage, we have always been among the most conservative brokerages for this same reason. 

While this is bad for our business and the industry in the short term, as the trading volumes and revenue may drop, it hopefully will help improve the shallow participation in capital markets bogged down by active traders turning inactive due to trading losses which are potentially triggered by leverage. 

What next?

Based on this clarification from the exchanges, we will be adjusting the leverages on all our intraday products. MIS/BO/CO for equity will need the VAR+ELM margin and MIS/BO/CO for F&O will require the SPAN+Exposure (NRML) margin. 

We have a facility for clients to pledge securities for margin with NCL (NSE clearing corp) which could be used for intraday trading as well.  Currently, pledged securities can be sold only after un-pledging which takes 1 day. We will soon allow the selling of pledged securities so that there is no need to wait until they are un-pledged. 

Also, there is an overhaul being planned on F&O margin requirements by the regulators. Correctly, the margin requirement for positions that hedge each other is most likely going to drop significantly in the next few weeks. This will be extremely beneficial as it will encourage people to trade low-risk strategies and can potentially attract a newer breed of traders to the markets.  We will keep you updated here. 

I have answered some of the follow-up queries asked in the comments below on Tradingqna, click here.

 

Happy Trading,

Nithin Kamath

CEO @ Zerodha and partnering startups through Rainmatter to help grow and improve the capital market ecosystem in India. Love playing poker, basketball, and guitar. @Nithin0dha on Twitter.

382 comments

  1. Vaibhav Pavtekar says:

    This on other side will attract retail traders to options trading and will wipe them off sooner than earlier..

    Not good.. as a broker zerodha should collect all such change in trend and report the same to sebi.. what things affecting when and how..

    • Prasad says:

      Not a good move. This will make only institutional traders to command market as they have huge capital.
      Very dangerous decision as sellers would reduce and prices would shoot up in unbalanced way
      Should oppose this

    • Animesh Kumar says:

      Which Circular saying Intraday Products needs full Margin in Derivative Segments .

      • pradip says:

        there is a relief in pure intraday trading as the margin is reported at the EOD and as if the trade was closed before 3.30 in the same day than broker have no need to report the margin which inturn gives a exemption from the penalty for the upfront margin for the client .This facility (exposure) is taken back by the SEBI for BTST OR T+2 KINDA TRADER .As the btst and t+2,5 day trader are in bigger risk and hence it is giving more risk for the brokers also ,So SEBI have taken the measure for the safety of the brokers and retail investors.

    • RAHUL says:

      This decision just proves that the retail investor are not for making profits. They are only for losing money. This market will always be there for the big investors not for the retailers. The trading volume will certainly be reduced. It’s just the game of big investors through SEBI circular. Now I can say that SEBI will no longer an autonomous body for regulating market. It never care for the retail investors.

  2. Kiran says:

    Sir ,suppose,i have 20 thousand worth shares of Company X in my holding. If i need to sell those shares after jan 1,2020, do i need money in my trading account??

  3. Rajneesh Pandey says:

    I have an upstox account, I have a pro subscription with them that gives me higher leverage, will that stop now as well?

  4. Manish Chakraborty says:

    Of course this is not a good move. People who knows exactly what and how to use leverage will suffer because of the morons. And SEBI doesn’t even consider the people who actually are educated about the markets and are experienced. Instead of increasing the overall convenience of current trading SEBI is simply trying hard to cripple it as much as it can. Cause they are not affected. Some high paid lawyers makes all sorts of rules without regard for who are getting affected or not. And then forcing the brokers to follow suit. How long will this tyranny continue. SEBI is literally killing the market without even realizing it. If they really had done something good then Indian market would already have advanced 10 folds and more. But they are draining the blood from it drop by drop.

    • Vinod says:

      Yes manish. I wish to agree with you on certain points… But it will benefit innocent retail traders or beginners. Every trader is once a new comer. Some big pocket banks pulling out money from retail by manipulating banknifty options by triggering 2 to 3 bank stocks. Also professional traders, eg check twitter now some trending options sellers and buyers are using huge sum on to market with the help of top brokerage houses by higher leverage of 12x to 20x on dying options scripts below 10rs premium. Once gain is someone loss – that is from retail traders beginners…. If they are wiped out continuously how will our economy will grow or participants in market increase.

      • PRATUL says:

        so??.. someone who knows how to ride a bike or a car should sit at home because some newly learnt person was killed in an accident???!!!! worst move by SEBI

      • Aashish says:

        Beginners itself don’t know much about the market let alone to make profit & I don’t think any sense that this circular will help for beginners because they should grow in market with large volume & volatility.once those become mature in market they will also wish more leverage.Now what for those who are in market for long time & wantvleverage.without leverage even market will not grow .so don’t put such reply that only for beginners you will spoil the hardship of retail traders who have spent long time in market & even generated big revenue as STT for govmt.

      • ROHIT SHARMA says:

        This means that if no option seller in the market our economy will grow 😁😁😁

      • Rohan says:

        Dude, dont be so dumb…. if option buyer losses and option writer wins then that doesnt affect country’s economy…

    • Mahesh says:

      Well said. SEBI is over doing their job and just killing the market. SEBI board members who approved this need to go to other developed markets to understand what regulators are doing there and learn from them. This is just lunatic

    • Lokesh Kumar says:

      This is a wonderful decision was SEBI. SEBI is not a fool institution. It is serving in the interest of market.

      1. Speculation will be reduced significantly. Market has off late become a gambling paradise. Market is not for this. Markets are supposed to be efficient and in a market where 88% money is involved in options trading manipulation rules the roost. Everyday people take leverage and close positions from 3 to 3.25 PM. It was very easy to predict who are struck and the market used to run significantly without any reason. Check 3 Jan 2020 Nifty movement from 3 PM.

      2. Retailers are very less in option selling. Most retailers are option buyers and losing their shirts by leveraging their positions. Since the introduction of weekly options, option sellers have been controlling Banknifty and NIFTY movement by controlling a few stocks and moving positions in their favour.
      The rich are becoming richer and the poor poorer.

      3. The speculative volume will go down and if one understands market the more you trade the more you lose. Brokerage firms are at a significant disadvantage owing to this decision. ITR department has reported significant boost in profits are weekly options introduction for option selling firms and brokerages. The question is who lost that money. SEBI is trying to protect them.

      4. Option sellers will always be the king and they will always rule the market. The only thing is that those who used to deflate the prices by selling will get reduced significantly. It may lead to increased bid ask spread increased options prices and brokerage firms increasing their brokerages but it will only discourage option buyers from plunging at exbortitant cost. Markets are not for intraday speculation and it is better to curb it. Retailers are not getting richer by intraday trading and it is better to keep them away from option trading.

      5. Option sellers if they know that they can make money by option selling will still arrange the money even if it is 100 times because they know that this is the winning side. Option buyers have always been doing that losing and arranging more money. Intraday option selling for retailers would come down significantly. People like PR Sundar, Mitesh Engineer, Jegan, Manish and so on who are not even SEBI registered professionals have been conducting workshops and minting money by selling huge chunks of options. Their profits will be hit significantly.

      • ROHIT SHARMA says:

        So according to you no leverage must be provided because options seller earn money from this
        Wow what a logic
        However no one can stop anyone to sell options
        Second why leverage is provided in all foreign markets
        So they are doing anything wrong
        Indian are always right …..

        • Ganes says:

          1.SEBI is not fool it safe guard the interest of retail traders and investors.
          Glenmark if you watch the company financial sheets you would notice that company performing very well and and continuously in second position for making profit. Debt is ok-ok but due to a bad news which was not big issue it was beaten down to 580 to 270 levels with 4 months. Who did that option put seller and operators. the volume was significantly high that period. on November 18 2019 it run 23% approx Positive review from the CLSA that day most of the seller was destroyed and the stock stable at the area of 328 to 355 level after that falling was stopped.
          I know someone kick the bad operators out from the stock. This Is manipulations and Investors Stuck In a stock for year.
          2. Zee case was the same one day Drop of approx 150 points in one day . See this create problem for the market to stuck at point and believe me dark day for investor.

          3. Those company who don’t have options and futures they run like bullet train.
          Example :- HEG FROM 70 TO 4800 RS WITH IN 3 YEARS Tax free money.
          Graphite 90 to 700 Within 8 months
          IB ventures 18 rs to 800 rs within 2.5 years
          4. Those who have future and options like DHFL from 600 to 18 rs
          4. SEBI SHOULD NOT BAN intrady leverage or intraday but Should Completely BAN Options and Futures because this are the tools of manipulations and Gambling.
          Stock cash market is not pure gambling..
          that why your S/L hit too much sudden spikes and failure of patterns.

          thank you.

          • ROHIT SHARMA says:

            Ha ha
            In year 2018 Icici bank quarter report was leaked before announcement
            SEBI could not do anything
            First stop insider trading

            • kamal says:

              Rohit ji, He is saying the same why they are manipulating because of the quick profit in Options markets so they manipulate the whole market that’s why stop options trading it is pure gambling

  5. Mahesh D Salian says:

    When will pledge of Bharat Bond ETF be accepted?

  6. Anand says:

    When will this be effective in Zerodha?
    With this all brokers need full margins for intraday (1X)?

  7. DEEPAK KUMAR KANTH says:

    Hi Nithin,
    Thanks for the update.
    Do you have any idea by when the margin will be lowered for hedged index trades? I had read it on moneycontrol on 30th of October but no news since then.

    Thanks

  8. Saurabh says:

    Hi Nitin,

    I want to know how much the margin required will be increased for writing one lot of nifty/ bank nifty options

    Thanks
    Saurabh

  9. Kapil says:

    It’s for all brokers or only for discounted brokers

  10. Sumito says:

    Does it mean from now on I won’t be able to sell one lot in nifty with 50 k capital using mis or co?

  11. GOWTHAM says:

    ohh my god it leads to retail participants kicked out of the market. its like whose having huge money they can earn

    • amit suri says:

      Yesss feeling so bad to say ur right.. some body doing all that to contain any hope of common man getting Rich. And if he wants to be rich only hope is to be better be a politician

  12. Bibhuti Bhushan Barman says:

    This is just another bad move from Exchanges.

  13. SUKLA CHANDRA says:

    means negative for retail trader who use extra leverage for intraday option selling– volume will get affected–does it affect daily intraday movement of Nifty/BN, less volume/less retail seller= less volatility movement on index

  14. Kaustubh says:

    From when new requirements will be applicable ?

  15. Sathish says:

    Hi, Nithin, is this the same applicable to MCX?

  16. rohit says:

    Only Zerodha will benefit as people usually choose other brokers for high leverage….now they will shift to Zerodha..

    • NARINDER kumar jha says:

      Why zerodha then zerodha is pathetic with there software platform it hangs like samsung phone we will shift to full time broker with banking account,zerodha thinks its not going to be hurt but result they r going to see it soon.zerodha soon going to be big zeroooooo.

      • Amit says:

        Yes soon all discount broker will be gone and out from the business… all these broker are in business because of intraday… think about why they introduced 20 brokerage? why we want to put 5/10lac RS in there account than bank trading account like HDFC security?

  17. Bharat Naik says:

    Till now we required around 14000 to short Nifty Fut here onwards how much will be required?

  18. Venkatesh says:

    hi, does this affect option buyers also since they don’t need any margin? I think the only way this change affects option buyers is on the trading volume/liquidity. right?

  19. Mani says:

    oh no, i can’t trade 100 BNF lots/day anymore. I will give up trading and become a monk.

  20. Jignesh says:

    Government indirectly asking market participants to do Dabba trading. No margin restrictions, no STT, no Income Tax, No Brokerage GST….

  21. ravi says:

    so after this
    FII – Remain
    DIi-Remain
    Mutual funds – Remain
    and politicians k contact vale bade player rahenge

    lekin ise INDIAN stock mkt ko fayda hoga ?

    agar new player entry lena kum ho gaye ?

    pehle tumhare 60day challenge ka paisa band karwaya then slowly slowly margin kum karwa denge

  22. manoj satija says:

    Hi Nitin

    With this change will we discard MIS product. Technically will there be any difference between intraday and swing product like btst, stbt.

  23. Namit Jain says:

    I could smell this coming from a mile away. My prediction, Either the broker will be allowed to give a max (I guess 4x) multiple of buying power for intraday like in the US, or the new margining system will calculate VaR for intraday differently and VaR for overnight would be different and the brokers will be required to collect upfront the new VaR for intraday. All to standardise the maximum leverage. No longer will there be 10x 20x leverage. This is if SEBI thinks logically.

  24. Keshav says:

    This will
    1. Kill the liquidity in the futures market
    2. ROI is very low
    3. Lot of brokers will be out of business
    4. Approx we need 10lakhs for 1 lot trading in most futures, reliance alone need 7.6lakhs
    4. After karvy, who would put so much money with discount brokers like zerodha, Upstox etc

    • Avinash says:

      On what basis did you arrive at the 7.6 lakh calculation? The NRML margin required is around 1.35 lakh.

      • Pradip roy says:

        He is talking about 2021 dude…
        This stupid sebi management will ask 7.6 lakhs in 2021 for trading 1 lot of nifty..
        Be prepared for that too..

  25. CHANDRASEKHAR says:

    Whether leverage in MIS/CO/BO in cash segment at Zerodha affected?
    Thank you

  26. Srinivas naik says:

    Hi Sir,
    selling of pledged securities with out waiting for one day (un-pledging) will be a welcome move.
    Thank you.

  27. Mahesh says:

    Sir i am associated partner.
    What margin will be required for intraday trader to trade f n o in BO or CO.
    Like 1 lot bank nifty margin 10k to 12k now.
    After this change
    1 lot Bank nifty need ????? Margin

  28. Satya says:

    Present 15x (Aprx) margin is Given by zerodha for Bo/Co orders.
    After the Circular what type of effect can we expect?

    Reduce the leverage?
    Or
    Completely removes the Bo/Co/Mis orders from KITE??

  29. Mohit says:

    The step is in rite direction and with good intentions but the results will vary big.

    The new rules will make parallel unreasonable and unreliable (dibba trading) more boost and people will eventually lose big there

    First step instead of increasing margins should be strict laws and action on curbing dibba traders and provide which is not only causing revenue loss to brokers, capital errosion to traders, loss of revenue to exchange and bigger loss to govt (since no taxes)

    Thou the step is welcomed but would love to see strong action against dibba trading and traders..

  30. Anonymous says:

    It doesn’t seem to be applied as of now … We are still getting the margins. Not that I am sad about it … but this is causing a lot of confusion … Can someone clarify when the rule will be applied. Also, other brokers have given no such notice.

  31. Rohit says:

    Hi Nithin,
    since when will this be effective ? were new margin and leverage requirements applied there already for trades done yesterday 2nd Jan ?

  32. Praney Malhotra says:

    Nithin somehow I feel SEBI is trying to kill the business of discount brokers as well. It may be a part of lobbying by big stockbrokers.

  33. Neha says:

    What if I have placed F&O order with NRML margin…upto how much lossess I can hold the position before any square off by your side..
    Eg. Nifty 1 lot margin 1.04 lakhs

  34. Kiran says:

    I think, its a miss understanding of the circular. Still wait for other brokers to react on it.
    As of now every other broker is still providing the Intraday leverage as is.
    If this is a rule then why rest all broker are still giving and didn’t say a word about it?
    My be Zerodha (Nithin) is pushing the panic button little early or Is zerodha complaining on other brokers providing more leverage?

    Truth and fact will unwrap soon.
    Thanks for informing us.

    If possible please answer my questions.

  35. Kiran says:

    Nowhere in the circular i see that NSE F&O Intraday leverage is impacted as mentioned.
    Being is such a responsible positions, please share it with care.
    Millions are reading your thread. Please inform the facts not intentions, Nowhere else i am seeing this except Zerodha.

    Sorry Nithis (Zerodha) if i miss understand the circular. I am little over curious to know the fact.
    Anyway i would wait for few more days to know the actual facts.
    Thanks anyway.

    Please reply or condemn me with proof.

  36. TANAY says:

    Does it affect equity cash intraday? If I have Rs.5000 in my trading account, can I trade intraday in equity cash using margin ?

  37. Arun says:

    What abt mcx. BO/CO margin

  38. Amit says:

    Is there any way this can be challenged in court?

  39. Kiran says:

    What does it mean?
    No change in Margins?

    https://twitter.com/san1suresh/status/1212782048944910336

    Please clarify?

  40. Trader says:

    Lets talk about the parties involved in the leverage trade. The trader and the Broker. The trader has to put up a certain level of margin as decided by the broker to take a position and i hope whatever money the trader is putting up is dear to him/her. Secondly no broker on the entire planet would lose a penny in a trade taken by its client. That’s the reason they have a dedicated RMS team that monitors positions around the clock and has the final authority in case of a loss. So why on earth does SEBI come into the picture to dictate the terms of leverage?

    • Manish Chakraborty says:

      Cause SEBI is made of a bunch of lawyers. They really don’t know much about how trading works with RMS and BO, etc, etc. managing risks and such. All they intent to do is to make sure that retail suffers as much as possible while the rich Mutual funds gets richer and richer. Thats it. Thats the only reason why SEBI is non stop attacking retailers. They haven’t done any real improvement to the overall market. All the modern technologies and stack are provided and introduced by the brokers. While SEBI only comes and causes hindrance to everyone. They can’t let a smoothly functioning system run as it is. No. No. They have to somehow cripple the whole system and then slam the retailers by asking for more money for a usual contract.

  41. Aniket says:

    @NITHIN and zerodha team please rise a concerns against SEBI circular behalf all small Fulltime traders to take it back this circular . Zerodha and Nithin you personally take this seriously rise a voice against this circular as business and for a retail traders ..most all people things circular is worst

  42. Prashant Chauhan says:

    Dear Nitin, Can you pls update/confirm if the Equity (cash) and Equity Futures margins are updated in Zerodha’s Margin Calculator page now (as I could still see few stocks with 12.5x margin)? Pls help.

  43. Shikshit Kumar Pandey says:

    Respected sir
    Suppose I need to short 1 mega lot of crude oil on intraday basis then how much money we need to have in our account

  44. Ravi says:

    yes..it will kick out the retail participation. This will decrease the acceleration of the market.

  45. Profit says:

    Kotak sec has sent circular now saying supermultiple (higher margin order for Intraday with BO/CO) is available now..Morning they have stopped supermultiple to adjust for sebi margin circular but now it is available..Margin for FNO intraday is available even now 50 times with 1% stoploss in supermultiple for nifty index futuresin kotak sec..
    Zerodha pl check and clarify these margin issues as soon as possible..It is creating lot of confusion..

    • Vineet says:

      Dear zerodha team,
      Pl. Clarify whether co/bo will continue to offer current leverage.
      A lot depends on it.

    • Udaya Kamath says:

      Hi can you please tell me where is the link for current “FUTURES MARGIN REQUIREMENT” for “supermultiple” product on Kotak securities website? I checked but could not found.

      ‘ kotak securities

    • neeraj says:

      @Profit:- This 1% stop loss requirement given by kotak for supermultiple plan, is it really helping you. Option price fluctuates so much that it can hit the stop loss of 1% very often. How do you find this useful? Can you please explain?

  46. Vijay says:

    Is this new margin rule applies to CURRENCY DERIVATIVES….???

  47. maddy says:

    Nithin,
    Regarding Hedged, risk defined positions like spreads – will the margin blocked be equal to max risk only? Or will there be some oongli of SEBI here as well?
    If my Call spread has max risk of 4000 then I want only 4000 margin to be blocked. This will be as good as current high leveraged trades.
    Plz reply.

    • It won’t be that good as there is an execution risk while entering and exiting trades. But margins should drop upwards of 60% to what is currently required.

      • maddy says:

        That’s what I thought! SEBI will do some oongli whatever may.
        Even if 60% reduction then 1 naked call sell which now require 1L+ margin now will require just 40k. Add to that premium for hedging leg.
        This wont compensate for what SEBI has brought on upon industry.
        2x-3x of max risk is ok maybe. So 10-15k for max 5k risk will surely bring in the new kinda traders and strategies.
        What’s your take, Sir?

        • I think it will start somewhere and then get reduced from there. Making a drastic change at one time is also a big risk, especially as this will be applicable to both index and stock contracts, where stock contracts can turn illiquid in no time.

          • maddy says:

            “I think it will start somewhere”
            Where?
            Oh GOD! not at 90% of current margins!!!!!!!!!
            Even 50% is BAD.
            Please lobby for 10-20% atleast for index derivatives!!!!!!!

  48. Kaushal says:

    Hi Nitin,

    Thanks for the detailed article it clears lot of air. Please reconfirm these two:

    1) From tomorrow intra day leverage in Cash and FNO gets over. As, full margin needs to be posted before initiating a trade.

    2) By end of the month we are expecting to see another good news in terms of rationalizing margin requirements for hedged multi-leg option strategies. Is it correct? Is there any other changes regarding exposure margin requirements in the pipeline?

    Thanks

  49. steve says:

    Hi Nithin,

    This changes has been updated in Zerodha Margin Calculator MIS, F&O?.

  50. vidhya says:

    Haven’t you changed this requirement in margin calculator. .. your margin calculatro shows i can buy 24 shares of reliance in MIS, while the VAR is 12.5%

    RELIANCE:EQ
    Cash available
    3000
    Stock price
    1534

    Number of shares that can be bought

    CNC 1x MIS 12.5x
    1 24

  51. Ravi Shankar says:

    No one else is talking about this. Can we have the link to the SEBI circular regarding intraday trades .

  52. Mahaneesh says:

    Anyone interested in protesting against this now? 😛

  53. PT says:

    I think Intraday players will have to be extremely selective on the trades going forward. For guys like me who place multiple trigger based orders (and cancel ones not triggered EOD) – it will be a problem as the margin is blocked when order is placed (irrespective of triggered or not) – It would be great if the margin block comes into force when order is triggered or executed.

  54. Guest says:

    I know one broker – famous for high leverage reduced leverage from 40X to 10X today for cash today.
    By the way 12.5% means 100 by 12.5 = 8X leverage for Zerodha in cash (equity intraday).
    I think eventually all brokers have to stop intraday leverage for Cash.

    Still, today many brokers are providing Derivative Intraday Leverage. So, probably we have to wait further to know intraday leverage of future and option selling. If intraday future leverage is gone then option selling intraday leverage also which will effect the option liquidity more than future. IMO.
    Wider spread in stock option will kill the stock option market for sure. Already there is less liquidity in stock options.
    Anyway this is completely wrong move, as no world market (any country) have stopped intraday product (with high leverage).
    Hedging will be very tough for big investors during market crash as future trading will require full (very high) margin as NRML.
    Also short covering will be less due to less volume/liquidity. Market will loose momentum during up move in absence of enough wrong side short covering.
    Also market will find it difficult to take support during big crash (due to less short covering -profit booking from shorts at new low).
    Market structure will be damaged without liquidity in future market.

  55. Ankit says:

    Kindly provide-
    “Number of times SL will trail” in BO

  56. Sudheer ch says:

    This is pure big players game..

    With overall story what I understand is, this is perfect googly from big players..

    Let me explain how.. With high leverage many retail traders were able to do option writing(selling calls and puts) and making pretty good amount.. Now a days many mentors, YouTubers, advisers are suggesting their clients on how to earn on options writing.. Which is problem for big players.. So if they stop this leverage, no retail trader will able to invest lakhs of Rupees to sell options.. Obviously they will become option buyers as it wouldn’t require large capital..

    As a saying goes 99% of option buyers will loose money.. That is what big players want..

    Note: No intraday trader will quit trading as it is an addiction..

    If I am not wrong, in near future they will exempt futures trading from this and only restrict the leverage in options..

  57. Aswath says:

    I would like to know whether I can do equity intratrade with leverage or I cant even use leverage ? This might a silly question, but as I am a beginner trader I cant restrict me from asking this question .

  58. Bh says:

    Looks as if Zerodha(Nithin) is very happy with this move and is in a hurry to put the new rule in place ,
    wonder why ?
    No other brokerage is supporting it and is happy with it .
    .As a leader in this business , Zerodha should actually take the lead in raising voice against pointless rules and regulations .
    Trading should be considered just like any other business , it is also an art and a skill .
    If a person looses money by using leverage , then it is his responsibility .
    All business run on leverage .
    If leverage is stopped for traders then banks should also stop provide loans .Is it not another form of leverage ??
    Why only target stock/FNO traders ??

    • Kiran says:

      Well Said. Why SEBI and Zerodha are too much worried (Concerned) about retailers? Retailers are adults.
      They very well know about loss and profit. If not they will learn.
      In such case better keep retailers completely away from stock market participation, all are safe. and retailers
      can simply invest in either MFs or FDs. Why don’t SEBI and Indian Govt do that. Bar trading all together.
      Let only FIIs and DIIs trade. (Indirectly that’s what is happening).

    • uday says:

      @BH

      Yes, you are correct; More than SEBI, it is apparent that Zerodha is more enthusiastic is rolling out whatever comes out from the SEBI office; the rules and regulations which are against the participation of retail traders in stock market. That draws a sad picture. Being a leader in retail broking industry; instead of forming a opinion against such mindless rules formulated by SEBI; Zerodha is looking happy to join hands with SEBI !!!

      No other retail brokers have said anything yet. So my guess is that this absurd rule on intraday leverage will be rolled back by SEBI very soon!!

  59. Nikhil says:

    Hi nithin,

    Can you please update or add new margin calculator with new changes which you mentioned. I don’t understand more margin for bracket orders.

    Thanks,
    Nikhil

  60. yogesh says:

    where is the circular available please post the link or don’t spread the rumours .

  61. Nityaa says:

    @Nithin you looks very happy with move by SEBI. first work on your Platform and App .don’t worry if this happens then your Zerodha Empires also END.

  62. Punit says:

    My broker didn’t ask for full margin today. I traded with the regular leverage available to me.
    Please clarify.

  63. Diwakar Patil says:

    Not a good decision, Retail traders will attract to Dabba trading which is not good for themselves as well as the government as brokerage, stt & Other lives not going to government kitty.

  64. Vijay says:

    Hi Nithin,
    You should do something regarding this issue….Few months back SEBI told to extend trading timings till 11pm bt at that time all brokers stood together and apposed SEBI decision to extend timings…

    Now we retail traders request you to step in and solve the matter…
    Many traders left there job nd thinking to take trading as their mainstream profession with some money and lot of dreams…pls do something Nithin.

    • Kiran says:

      Vijay,

      You are at wrong place.
      Right now most of the brokers (almost all other) are opposing the move and are in discussion with SEBI.
      Only Zerodha or could be one or two other is supportive of cutting the leverage to their advantage.
      Since 10 or 11 AM, when people started panicked and asking serious questions, both Nithin and Zerodha team is completely quite. This will unfold next week. Better to check with oter brokers who provides leverage.
      They might answer better. I am guessing there will be reduction in leverage but don’t know to what extent.

      So what i am saying is you are requesting at wrong place who is in favor of cutting down the leverage.
      I am not seeing any response from any one of the Zerodha team since morning.
      They started the chaos and they should answer.

    • Rahul says:

      Hi Vijay,
      Nobody is coming out to help us. Let’s sort out this legally.
      This is big players game..

  65. Ashish says:

    Hi Vijay,
    Zerodha- the best retail brokerage….you enjoy THE BEST tag only bcos of retail traders…now retail traders are in trouble from this brainless SEBI move.

    • Retailer says:

      Hi Nitin,
      Pls raise your voice for retail traders like us. We have spend so much tym (months/years) analysing the market and many of us have left their jobs. We are large in numbers having 25k to 50k or 1lakh in trading account and countless dreams to achieve. We simply can not afford 1 lot of Nifty for 1.06 lakh and earn only 25 points (25*75=1875 rs Profit) plus around 150 to 200rs charges. So, investment of more than a lakh and earning is less than 1.5% is not a feasible business fo us anymore (that too with the possibility that one may loose in the trade also). If you keep ur silence agaist this new SEBI rule. We will surely be forced out of the market. We still dont know why are you supporting SEBI and not a Retailers. Seriously these days India and this Govt has nothing to offer their citizens.

    • Ashish says:

      We retail traders must go to PM modi ji & urge him to remove Babita Rayudu (new director of SEBI ) from the post who is working against the interest of common people retail traders & this circular will diminish STT .

  66. Aman says:

    Okay let’s say we are ready to give that margin but Just a logical question, if I am selling 12000 put and 12500 call, margin for both is around 90k, then why do I need to have 1.8 lacs… market can simply move in one direction. Why it’s not only 90k for both?

    • This will get sorted soon. Exchanges are working on the new margining system.

      • Ashish says:

        Dear Nithin
        This circular is completely against the interest of majority of people of country & this move does not protect the interest of common people. Even such circular is not in any developed country which debars the retailer from big leverage .
        So this circular should completely be rolled back.You just think what is the logic to put 1 Lac money at stake to earn only small money like Rs.400 or 500 & that is not guaranteed too.It might be less also because intraday trade is squared off before 3.20 pm.
        This much money can be earned in any other business outside the stock market investing 1Lac & that too without risk

  67. Rakesh J says:

    I trade Bank nifty option only on expiryday i am having 350000 in my account from which i can sell nearly 240-260 quantity.
    Will it affect me?
    if yes.
    how much?

    • Mr X says:

      Yes, now you need NRML positional margin for option selling for intraday selling also.
      As there is no leverage, with new rule you can sell maximum 80 units.

  68. Retailer says:

    Hi Nitin,
    Pls raise your voice for retail traders like us. We have spend so much tym (months/years) analysing the market and many of us have left their jobs. We are large in numbers having 25k to 50k or 1lakh in trading account and countless dreams to achieve. We simply can not afford 1 lot of Nifty for 1.06 lakh and earn only 25 points (25*75=1875 rs Profit) plus around 150 to 200rs charges. So, investment of more than a lakh and earning is less than 1.5% is not a feasible business fo us anymore (that too with the possibility that one may loose in the trade also). If you keep ur silence agaist this new SEBI rule. We will surely be forced out of the market. We still dont know why are you supporting SEBI and not a Retailers. Seriously these days India and this Govt has nothing to offer their citizens.

  69. Sudheer says:

    This move is as bad as demonetisation.. That killed many small time businesses..
    This will kill maximum Retail trades..

    Hope this won’t happen..

  70. MSK says:

    I think, one has to publish these articles with supporting circular. Else this information is fake. If Nitin said so, his first job is to change/ modify the the margin calculator. NITIN, please update Margin calculator first.

  71. neeraj says:

    Sir, you mentioned “… the margin requirement for positions that hedge each other is most likely going to drop significantly in the next few weeks.” . I assume that long strangle, long straddle, put spread and call spread are included in this among many others. Could u please tell me whether short strangle or short straddle would qualify for this?. Because risk is more here, will the margin benefit be less compared to other hedging strategies?

  72. Dilip says:

    Hello Nitin,

    Just wanted to know, this circular has not yet been implemented and not yet effective still under discussion I guess❓But why the zerodha has made changes to the margin requirements.

    • Kiran says:

      Ideally, this should be in affect right from 1st Jan 2020.
      But other brokers are not interested. So SEBI gave guild lines after 31st Dec 2019.
      All other Brokers are in talks with SEBI, but Zerodha is in favor of increasing margins, that’s why they are making more noise to implement it, instead of standing in support to retailers like us, they are looking for the benefits out of this. We might get more clarity next week.

  73. Kiran says:

    Hi Nitin

    The entire sebi circular talks about collecting upfront margins for the Cash Segment and there is not mention of anything related to derivatives in the said circular.. so why is there so much speculation on providing leverages or not..

    4.1.2 of the circular says “Henceforth, “LIKE” in derivatives segment, the TMs/CMsin cash segment are also required to mandatorily collect upfront VaR margins and ELM from their clients…………….”

    which means that a customer is required to put upfront the margins required for cash segment.. “emphasising on the sentence … “LIKE in derivatives segment”, which as per my understanding should not affect providing leverages.. yes full margin is to be paid for holding overnight positions.. but how does this affect intraday leverages??

    I am unclear on your reply since the Sebi circular does not mention anything about derivative segment in the whole thing.

    Kindly clairfy

  74. Danny says:

    @Nitin, it seems full margin is not applicable to intraday at least as if now.

    As with great enthusiasm you have published this article, only one inference one can deduce that you are not retail traders friendly. Initially many broker’s opposed this move when there was no clarification on intraday margin but you rejoiced and took opportunity to publish this article. I know as if now you have numbers with you but you never know when time would change and all retail traders will shift from Zerodha to other broker’s. Atleast I m sure if there won’t be any demarcation between intraday margin requirement and carry forward margin requirement for option selling, I will switch to other brokers who deals in even lower brokerage.

    Good luck to your zeal against retail traders!!

  75. Himanshu says:

    The biggest shame of this whole scenario is the push for this absurd restriction from brokers like Zerodha and a few other. Brokers are supposed to represent their clients not suppress them. I really appreciate Zerodha and Nithin. But now when zerodha is lacking in any new competitive advantage and playing field is getting even for most brokers i.e: less brokerage,fine platform, reliability etc. This is how you try to get ahead. This could be the only explanation for Nithin’s chauvinistic love for this restriction. The logics provided are

    1: Leverage looks good but is a double edged sword and can also cause big losses – yes, True but so is everything else in the market. You can refuse leverage and still lose your life savings in cash market. If this is the fear then keep the people out of the market all together. In every way the whole market is a double edged sword too.

    2: For the protection of retail traders : if you guys are so much worried about the retail protection then do trades on their behalf. According to this logic there was no point of having any leverage instrument in the market such as futures and options.

    3: Brokers or sebi never lose a single dime because of an individual trade be it leveraged 60x or 0x. Instead both get paid every damn time whether we lose or win in a trade so both should stop acting like they are doing us any favour here.

    4: If you lads were so worried about retail traders then a broker as big as Karvy would not have done what it did.

    5. Instead of curbing that problem you guys are decreasing leverage hence pushing retail traders to have more money in with broker making them more vulnerable to the scams that you failed to prevent. (Doesn’t sound like a retail protection to me)

    6: Orders like BO and CO come with SL and there can be no protection more than a stop loss then what is the logic of cutting leverage there ?

    7: People who understand this profession truly and make living off it are the ones who have leverage as the only bridge between them now and them being the big boy of market.

    8: People who lose will continue to lose and only the dumbest of all can think that mere change in leverage can change that, so nobody will save this trader anyway, secondly the big boys with big bucks will also not give a damn because they don’t need the leverage. The only people this will affect are the people who have the understanding of market ways and are using leverage to increase their already existing profits and not to gamble in the market.

    Now since Nithin posted it, I don’t expect it to be a rumour but I am glad he posted before the official circular. Atleast now Sebi can see how the so called retail traders “they are trying to protect” feel about the tyrany and absurdity of this level.

    With expected decrease in margin for hedged positions I understand the regulators want to push less risky way of trading for new comers and most are okay with it. But what on earth is the point to disrupt the already fine system just because one or two brokers came to them weeping.

    • Kiran says:

      Very well explained.

    • Aman says:

      They are talking about the protection of retailers, but they don’t have any shame when they sell our data to institutions like our stop losses and all so that they can trap us. Where are their morals at that time? They are talking about retailers protection but due to this change, many people will get their hands dirty on options buying and that’s going to kill them in the long run.

    • mohan says:

      u right brother.
      i don’t think these stupid sebi officials have brain to think out of box solution for their own policy failure. before i enter into a trade i know much i’m gonna take risk and how much profit i could expect if it goes on my way. i don’t enter into a trade without this calculation. i hope all experienced traders do the same. in this case why sebi is worrying about us?. if anyone doesn’t know what is market, pls stop coming in.
      And if newbies not in market big guys can’t make good money. this is also truth.
      5% traders earning money consecutively which directly come from 95% traders pocket who lost it.
      if they want to protect investors or market participants, pls do the following things
      1.they have to make all auditors must be accountable.
      2.all the company promoters must not pledge more than 50% their shares.
      3.stop inside trading or if it happens put heavy penalty like SEC.
      4.stop weekly options expiry segments to reduce volatility in the market.
      i’m sure they don’t do it cuz they get benefited from big guys. those sum, they can’t earn as salary for their life time.

  76. Prakash says:

    Hi Nitin,

    Is this change in margin requirement confirmed? From when this will be in effect. I am not seeing any other broker saying this. So why only it’s change in Zerodha. Please clarify.

  77. Soham says:

    Hi Nithin!
    One doubt though.
    If a share is of Rs 100 with its leverage in zerodha as 12.5X and I have capital of Rs1000. ( Therefore the number of stock i can buy is 125)
    So from now I have to buy the same amount of shares, i need to have Rs12,500 in my account?

  78. Sheema says:

    I sell nifty weekly and monthly option in normal will it affect me ?

  79. Rajendra says:

    As per SEBI circular dated Nov 19 2019, the new rules for margin requirement will be applicable form Jan 1 2020 (https://www.sebi.gov.in/legal/circulars/nov-2019/collection-and-reporting-of-margins-by-trading-member-tm-clearing-member-cm-in-cash-segment_45011.html)

    “The provisions of paragraph 4.1 of this circular shall come into force with effect from January 01, 2020
    and provisions of paragraph 4.2 of this circular shall come into force with effect from April 01, 2020”

    Below is the clarification issued by NSE on derivatives segment through circular dated 31st Dec 2019 (https://www1.nseindia.com/content/circulars/INSP43069.zip)

    “B. F&O segment
    In the F&O segment, it is mandatory for Trading Members to collect initial
    margin, net buy premium, delivery margin & exposure margin from
    respective clients on an upfront basis. It must be ensured that all upfront
    margins are collected in advance of trade. Mark-to-market losses (MTM)
    shall be collected from clients by T+1 day.”

    As per this clarification by NSE all the products like MIS/BO/CO will be redundant henceforth and traders are required to provide full margin.

    The SEBI circular states “4.1.Collection of margins from the clients by TM/CM in cash segment:” but NSE through its circular has clarified it is applicable to Derivatives segment as well. This should be cleared by the SEBI/concerned authorities as it will affect lots of brokers business forcing them to shutdown and loss of jobs and as a consequence affecting liquidity in the market.

    https://economictimes.indiatimes.com/markets/stocks/news/intra-day-trade-may-dry-up-as-traders-told-to-pay-full-margin-upfront/articleshow/73077727.cms

    @Nitin you were a trader once, what would have been your reaction if SEBI had come up with this rule back then when you were trading with dreams of building a business or anyone with a billion dollar idea of building a discount brokerage company or any other business for that matter through earning in stock market. Would you have taken the risk of building a discount brokerage despite the fact that there is potential risk of retail participation taking a hit with this rule. The 1000+ jobs you created and the initiative of funding of startups through Rainmatter would have been difficult or impossible may be. Please speak for retail investors, you might never know how many risk takers and budding entreprenuers you will be helping.

    The FM says India Inc needs to unleash animal spirit to reboot the Indian economy and in contrary they let institutions take these take illogical decisions that kills the entrepreneur spirit among the people, nipping them in bud. Hope better sense prevails among those at the helm.

  80. Kiran says:

    Thanks Nithin for sharing the QNA link on why the change in margins.
    Though there are reasons for this change, but as a retail traders we are very sad to see the Intraday leverage going away.
    Is there any other way to provide leverage on Indexes at least?
    Why should even SEBI ask for upfront 12.5% for indexes on Intraday positions?
    BO/CO orders on Indexes should cover the risk to a greater extent.
    If not more leverage on MIS orders but atleast BO/CO orders should cover the risk.
    SEBI should think on these lines. The Karvy/BMA are shown as reasons and blindly implementing these rules.
    But why can’t any broker suggest about BO/CO orders on Intrady for leverage atleast upto 3 to 4 times.
    as the Stop loss is pre-defined.

    See if this makes some sense?

    Thank you.
    One of your retail client.

    • Margin requirement to trade F&O is as per SPAN which is designed by CME (Chicago Mercantile Exchange). Check this link to see the parameters used to calculate margin, it doesn’t take into considering intraday or overnight.

      • Kiran says:

        Thank you.
        That is absolutely correct.
        The reason i am asking is, logically the overnight risk is different (More and unknown) compared to trade that closes before 3.20 PM. Again in BO/CO risk is pre-defined to a certain %. Why can’t we suggest SEBI to consider BO/CO with a limited risk SL for extra leverage atleast in Indexes where risk is less.
        So that brokers don’t need to put their money or clients money.

        In my opinion Hedged positions and BO/CO orders are more or less similar.
        Where in hedged the position is 100% hedged but in BO/CO it is almost risk defined except when there is a sudden flash crash which is unlikely at least in indexes.

        This is just my opinion and how i am looking at the possibilities for extra leverage for Intraday positions.
        You don’t have to answer to this. I am just expressing my idea and frustration.

        I think as of now the hope is only when SEBI reduces margin for Hedges positions.
        May god save retailers from Big guys ……. as majority might move towards Option Buy.

        But thanks a lot Nithin for clarifications.

  81. Aman Talreja says:

    1. Is currency trading in MIS product type is still available ? Do i have to spend more money in currency intraday trades?
    2. Do i have to keep some extra cash in my account if i want to Buy options , or the amount equals to premium only.?
    Please reply .

  82. Trader says:

    Bad move from sebi…bt we have to accept that it brings lots of descipline in the market and avoids dumb traders .. take positive nd move on guys…let’s plan strategies nd put some extra effort …every thing will be fine in few months…postpone all your dreams for few extra months..

    • gaurav says:

      It will effect the whole trading industry in big way. If there are no traders to trade, there will be no liquidity and hence whole trading will be effected.

  83. Akshay. says:

    Hi Nithin

    Will there be changes in MCX too ?

  84. Dilip says:

    Hello Nitin,
    I have contacted my broker Angel Broking and they still offer 45 times leverage and are to discounted as per SENIOR circular effective April 2020, what is u r say on this?

  85. Sushant says:

    Hello Nithin,
    I want to trade in Equity Only and that too only Intraday Trading . Will this affect intraday margins for equity trading in anyway ?
    Please Answer
    thanks

  86. siddharth r says:

    well said bro shame on sebi

  87. Hitesh Pandya says:

    Hi Nitin with the new margin rules the liquidity in f/o will affect so will it reflect in the chart ? as i am trading on the basis of chart only

  88. siddharth r says:

    what will the margin required for gbpinr for 1 lot intraday ?

  89. Ratan says:

    Is it applicable for commodity (crudeoil) also?

  90. param says:

    Sounds like SEBI is indulging into moral policing. They are keen on losses made by retailers.
    But before going ahead, do these bunch of idiots have guts to act against SL hunting, index management by big players?
    Margin requirements on hedge positions are reduced means SEBI is promoting option selling 20-20 matches(bnf) in stock market should help big fishes in long run. Why no BO/CO for that matter?
    Still not able to figure how does SEBI relate margin changes with karvy fraud?

  91. Sunil says:

    Hi sir, does this also imply for Commodity and Currency segments?

  92. Navjiivan says:

    This kind of change is brought by the SEBI for the benefit of institutional traders and other traders with high investment. As intraday traders were able to write options with the help of leverage, number of option writers increased and the option premium collected decreased. As these big shots are worried about being in competition they seeked the help of SEBI and regulated this idiotic move. If varying leverage was their concern they would have limited the intraday leverage to 8x or 10x. Why stop it ?

    So clearly this move is against the retail traders and is favorable to big players. Trading is an art and they want only the big players to do option writing / trading futures avoiding the skilled intraday traders thereby reducing the competition.

    And I am ashamed of zerodha for supporting such a move form SEBI. When citizens from other countries are trading in binary options, digital options with a leverage of 100X, SEBI is worried about 8X leverage.

    SEBI’s rules always favors the big players leaving the retail trader’s sentiment behind.

  93. Pankaj says:

    This move only to support big player,

  94. ROHIT SHARMA says:

    Zerodha has big benefit on this move.
    They charge per order or trade while other charge per lot. If no leverage will be provided by other brokers client will come to join zerodha

    • Guest says:

      If no leverage will be provided, then why pay brokerage?
      then people trading with nest trader will go to zero brokerage at Finvasia.

  95. Eshant Garg says:

    Very bad. This is the problem with Indian system. For mistakes of few crooks, SEBI is coming with a rule to punish the whole intra-day community. Big Shame.

    The argument of saving traders from big loss is so lame given the fact that now intra day traders with less money will be left with no option but to trade in options only.

  96. SacHin says:

    After reading all this one thing is sure now share market will also lead to recession.
    if SEBI starts to put control intraday margin.then discount brokers will out of the mkt.
    Solution is SEBI should stop futures n options trading.
    Again india share traders % will move only as 1% as compare to the worlds share mkt.
    Very bad move from SEBI..
    Retailers should stop trading and start searching job in Operator’s n Financial institutions company.

  97. Nitin says:

    Most important action to take by Sebi, is to bring down the lot size in fno. They are doing all wrong actions to justify there idiotic decision taken in past. They discontinued Mini nifty, and to punish the retail they increased lot size to 75 of Nifty. In USA they have introduced micro contracts, s & p 500 has lot size of 5 only in cmegroup.

  98. Guest says:

    Small Future traders will face difficulty-
    Previously traders have enough money to face MTM loss due to low margin requirement. Now traders will force to square of as MTM loss build up easily due to high margin requirement.
    Many traders will bound to trade with insufficient capital (not enough space to face MTM loss) in future market.
    Small traders will loose money in future market more easily.
    Same logic applicable for almost all intraday equity traders who used to trade with leverage.

    Small Option Traders will face difficulty:-
    And small trader who used to sell intraday options with leverage will shift to option buying mode due to very margin requirement, they will face huge loss sooner or later.
    We all know profit making consistently with option buying is the toughest job in this market.

    So this new rule will not protect small retail traders but definitely harm them.

    Now a days more and more small retail trader are writing options using intraday leverage and making some profit. So big traders lobby who are facing competition now may be behind that move.

  99. Ashok kumar says:

    I am leaving in market… I can’t full margin …bye bye market

  100. Vineet says:

    Dear Mr. Nitin Kamath,
    I just now checked the margin calc of zerodha.
    For NFTFUT, Buy side leverage is shown to be 27.8X and Sell side is 59.5x.
    Whether this is after considering SEBI’s current circular regarding ‘collection of full upfront margins for even intraday trades’?
    Or further changes would be made to it?
    Thanks.

  101. Sandeep G says:

    Atleast then reduce the lot sizes of the future contracts…
    Reruce the Nifty lot size back to 25 like it used to be till 2015-2016.
    Sebi wants retail traders to shift from futures to option trading…and there the big players are the sharks..they will swallow us in no time.

    Please reduce the lot sizes..

    • Samurai says:

      then why to trade options don’t trade it. only trade cash market in intraday.. why to give them opportunity stop trading in options it will close by itself

    • Aashish says:

      Hi Sandeep,
      You rightly said.
      But It seems that all this circular is for cash market product.other broker claims this.

  102. rajesg says:

    Sebi should take action on analysts/anchors on the news channels who give mostly wrong calls with huge stop loss. those anchors on hindi channels praise their pet chartists for their few right calls.

  103. Rajesh says:

    Sebi is under the influence of the govt. who wants the index to go only in one direction. i.e. up.

  104. pravin humbal says:

    Has zerodha already implement this new circular in fno co bo order or from when they will start implement…is there any specific date?

  105. Aman says:

    Hi Nitin,
    Don’t you think that indices should be kept out of this?… and if not then why collecting only 12.5%?… Market can certainly move more than that in any direction in a period of one month.

  106. Vineet says:

    This is a classic example of ‘sarkari babugiri’.
    Just because a guy is a class 1 officer, govt. entrusts responsibility on him of the things he/she doesn’t know.
    A person who doesn’t know any bit of railways is looking after key roles in railways.
    Same things regarding Collectors, and in this context, SEBI bureaucrats.
    Some damn guys who don’t know any bit of capital market, are made to administer it.
    What would happen if a person who doesn’t know driving is asked to drive a truck? Catastrophe !!
    Before taking such an important decision, SEBI should have taken wide consultation with the stakeholders & invited objections. Nothing happened.
    Seems that there is nobody who would stand behind small traders.

  107. AKG Rajeshvar says:

    Hi all,

    I think SEBI has made this move because they maybe expecting a market crash soon or in the near future… maybe so they are trying to lower the amount of blood going to be spilled by the retail traders/investors… World Economic Calamity is not looking good as of now, Idiot Trump going against Iran just for winning the election, Indian GDP under sleeping spell, Nifty at its Newest High might make a sharp fall… Overall I think SEBI will reconsider this intraday margin policy after passing the near term hurdles…

    • Aashish says:

      No point to diminishing the leverage.because every body who used leverage is quite mature & aware enough with defined stop loss so no endangering if market crash occurs.

  108. rajesh says:

    I usually sell both call and put at different strikes (same premium). For example if I sell 12250 call and sell 12200 put, both 1 lot each, what would be my margin amount ?

  109. Anoop says:

    This is one of the stupidest decisions by the SEBI and the govt. If brokers are providing good leverage, it doesnt mean that we have to fully utilize it, its upto every individual to decide how much capital to risk. If people have no qualms about losing their money, why the hell is the SEBI and govt concerned about people losing their capital. Also margins or leverage is the fuel for Intraday trading and if this fuel is reduced or removed, it will definitely affect everyone incl the big players negatively as the volume will dry up and there wont be anymore buyers or sellers. No market participants means no markets basically. In short everyone loses by this worst decision of SEBI. Fuel is required to keep every engine running, without it it will just sit idle doing nothing. How a vehicle and the fuel is used, is best left to the user. Its none of anyone else’s business incl the govt. I hope Zerodha and others will strongly protest against this move and enlighten the SEBI and the govt about this and instead of reducing the margins, will actually double or triple it.

  110. Shiju says:

    2 Questions:
    1) As the margin for the hedged positions are coming down, please clarify if BO/CO orders will continue to offer extra leverage since those are also the trades with definite cap on risk?

    2) Since Zerodha doesn’t allow to buy deep ITM and far OTM options, it’s very difficult to trade many of the option strategies. Once the new norms on margin on the hedged positions come in to force, will you allow to buy deep ITM and far OTM options at least to the tune of hedging purpose?

  111. ROHIT SHARMA says:

    Traders keep 5-10 lakhs with small brokerage houses just because of leverage they provide
    But after this rule no leverage so traders will withdraw all money and will start to join with big brokers
    Zerodha is calculating that most of these 3-4 lakh small traders will join zerodha
    One more thing zerodha is trying to show to SEBI that we are accepting this rule ,
    I saw Nitin’s interview on you tube on this matterjust watch carefully you would find happiness on his face ,

  112. Parth says:

    Suppose I Have Rs.5000 fund balance with Zerodha, and for trading with bracket order I get margin of 15.2* so now I can trade in intraday of equity shares worth Rs.76000. Considering this I have following questions relating to new margin update:
    1. Do I need to Increase my fund balance to Rs.76000 or lower amount for MIS or delivery based trades?
    2.Do I need to increase my fund balance before squaring off my intraday position to get intraday days profit?
    2.Will I get lower margin than 15.2 for trading BO in intraday?

  113. ROHIT SHARMA says:

    At the top of this page you would find link
    Details of leverage on various stocks

  114. Nitya says:

    💩@NITHIN you looks very happy with this circular but remember if this happens your Zerodha actually a Zero the END is near for Zerodha Empires, Nitin💩 you are a Villian for retail traders

    • We have the largest number of retail traders, contribute the most F&O trading volumes in the country, our revenue will be affected more than any other brokerage out there. The reason we had to put this post is that exchange put out a rule, the penalty of breaking a rule for an intermediary like us is quite big. Check this

      https://tradingqna.com/t/why-did-the-exchanges-publish-a-clarification-on-no-additional-intraday-leverage/68007

      • ROHIT SHARMA says:

        How you would be affected most
        You don’t charge per lot brokerage

        • We have the largest community of retail traders, we will probably be the most affected brokerage in terms of revenue. But if you go through the explanation above, there is no real way to oppose it, is it? Also once it is put out as a rule, the penalty for breaking rules for brokerage firms is quite high. Us discussing it openly is atleast getting all brokers to put an effort to see if the rule can be changed. Keeping quiet isn’t a solution, it would eventually end up being stopped without anyone getting a chance to protest.

          This is what I have explained in the tradingqna link I have shared.

          • Aashish says:

            Yesit, come forward & every body on this platform pls.come forward without wasting time & let’s go for Filing case in high court because there is merit enough in our points. There is conspiracy behind this circular by big players & SEBI & COURT will order to withhold this circular as per a senior advocate I have consulted.So please hurry up …
            Only to make comment is not enough now time is to do something seriously & our effort will not waste for sure..

  115. RAVITEJA says:

    is applicable for MCX too?

  116. Satish says:

    Hi Nithin,

    I mostly do Intraday Equity trading, Based on the conversation’s above , Here is my understanding , Moving forward also there will be leverage and BO / CO also will exist. The major outcome would be is that the maximum leverage would be 8x for any scrip.

    Also, When can we expect the Zerodha Margin Calculator to be updated ?

    Thanks,
    Satish

  117. Aashish says:

    Dear Nithin
    As you said opposing the rule will result in high penalty on brokerages firms but you are going to loose large numbers of clients if once this circular comes in force then you are going to loose big revenue either. so better to come with your clients so that pressure should increase on SEBI.most of the brokerages firm have not come forward with supporting clarification like you.As far as retail traders are concerned for a brokerage firm retail traders are asset of brokerage firms. so all brokerages firm except you are in continuous talk with SEBI so that this rule be rolled back.At least they haven’t supported.

  118. ROHIT SHARMA says:

    Mr Nitin it not matter of panelty on opposing the rule but to change the rule

  119. Rajesh says:

    There is no circular published in sebi website….I think this is hoax…..there is nothing in sebi/nse website with regard to the circular on intraday trading margins….

  120. Praveen says:

    Is this applicable to mcx fut ?

  121. Rishit Kothari says:

    Hi

    Kindly clarify

    1 Does it mean that BO& CO require same margin as MIS require or it requires same margin as NFO ?

    2. Does MIS require same margin as NFO ?

    Thanks

  122. Arun Prasath J says:

    Hi Nithin,

    Is this also applicable to MCX? Kindly clarify.

    Thanks,
    Arun Prasath J

  123. Punit says:

    I don’t know why only Zerodha is talking about this and no other broker. My broker is still giving me sharp leverages in all segments and they told me that no such thing is gonna happen. I think somewhere Mr. Kamath has misinterpreted the entire thing.

  124. Rishit Kothari says:

    Hi Nitin

    Kindly clarify

    1 Does it mean that BO& CO require same margin as MIS require or it requires same margin as NFO ?

    2. Does MIS require same margin as NFO ?

    Thanks

  125. ashok says:

    nitin sir….ab hum log kiya karenge road pe aa jayenge

  126. Hitesh says:

    Can I use mutual fund investment to use as the upfront amount? Using 1 lac just for 1 lot for intraday would be very inefficient even if I have the required money for trading

  127. usman says:

    Nithin sir,
    Regarding this new margin rules zerodha has’nt yet send any official notification to the clients . so from which date this new rules will be taking effect? .

  128. B Raj Mysuru says:

    Hi Nithin.

    Hegiddeera?

    Yaavaginda BO/CO MIS orders stop maadteera?

  129. Aashish says:

    Now you can see the scenario of Nifty chart today.This is because of SEBI circular not much due to America -IRAN tension.Let SEBI & zerodha try to give trial to beginners in without leverage market & till that time all trained retailers be out of the market.

  130. Shiju says:

    You are absolutely right Kiran. As per SEBI circular, they are just introducing VAR & ELM margin for cash segment similar to SPAN & Exposure for derivatives. This is being exaggerated and misinterpreted by brokers and later even by NSE.

  131. Shiju says:

    As per SEBI circular, they are just introducing VAR & ELM margin for cash segment similar to SPAN & Exposure for derivatives. This is being exaggerated and misinterpreted by brokers and later even by NSE.

    • Krishna says:

      You are correct. Span + Exposure Margin was implemented long back in FNO. On November 19th Sebi came up with a similar framework for Cash as in case of Cash upfront money was not required ( most of the traditional brokers) This has nothing related to MIS Margins being reduced in FNO. It’s been over complicated by Zerodha . Not sure the reason behind it. The benefiting parties have also convinced some dumb babus in NSE to bring their own interpretation of the Sebi circular on the FNO section and NSE released some circular on 31st December. I have accounts with other Brokers including Zerodha. I discussed with them ( other brokers) in length and none of them have this interpretation nor are they changing anything in FNO. They are going to Sebi tomorrow only for the Cash segment. Meaning you will continue to have leverage as earlier in FNO unless some Lobbying is done to force this additional thing to block Leverage trading.
      If Zerodha has removed the leverage, I cannot fight asking them to revert as it’s their call. Luckily we do not have a monopoly of brokerage firms in the country like we have in telecom these days.

      Also Karvy example is wrongly portrayed. The new rules actuallly encourage Karvy like cases in future

  132. Shiju says:

    As the margin for the hedged positions are coming down, please clarify if BO/CO orders will continue to offer extra leverage since those are also the trades with definite cap on risk?

  133. Varun says:

    Why is it that i am still able to sell 1 bank nifty lot using BO for ~Rs 16,000? i Thought this change is to be implemented immediately?

    • Kiran says:

      There will not be any change. Zerodha was just kidding 🙂

    • Aashish says:

      If some one files PIL in high court against SEBI circular do that this circular should totally be withheld so that never come in force .Because
      This kind of circular is not applicable in India.some idiots gives the logic that this circular will help beginners,means all warriors will sit out of war & who don’t know even to hold the rifle they are going to fight

  134. siraj says:

    Will Zerodha provide any leverage on equity cash or we have to pay full amount as cash and carry product?

  135. Bh says:

    Entire world, all businesses entertainment, manufacturing, service run on leverage.
    Banks lend and make money, it is a kind of leverage.
    Businesses borrow money, invest it and earn profit, it is a kind of leverage.
    Why is sebi targeting traders in stock market?
    Instead of encouraging retail participation, SEBI is killing it.
    And if i am correct, the present rule of cutting levergae in cash market is applicable only for retailers and not for FII’s.
    Does it mean Nse and Bse is only for FII’s and not for small investors?

    As far as abolition of leverage in fno, already there in widespread unemployment in our country.
    With this rule, small brokerages who employ thousands will loose business and close.

    The option of providing leverage to a trader should be left to
    broker, it is a deal between broker and trader.
    Why apply blanket rule?
    By cutting leverage, authorities are forcing us to operate in lakhs per lot vs thousands per lot.
    Will this not encourage more fraud?
    With thousands of crores in broker’s account, SEBI is indirectly encouraging brokers go the wrong path and introduce defect in the system.

  136. Sahil ansari says:

    Yes dear u r saying right. Now the volume will increase in dabba trading

  137. Ravi says:

    Can you all sign this petition and share it with as many traders as possible.
    http://chng.it/rbH4DRcb

  138. Punit says:

    Leverage is an important part of any trade. Removing leverage seems unlikely.

  139. LAXMAN says:

    If place A Bracket order in one lot Bank nifty with 50000 As funds available will it possible to this when circular comes into effect

    • Matti says:

      Once this goes live, it wouldn’t be possible to short a lot of Nifty with 50k. You’d need the full margin or ~Rs. 1lk to take the trade.

  140. Rahul says:

    Nitin sir can you please answer …now that intraday trading margin circular is effective…what will be the amount i need to keep in my trading account to buy one lot of nifty options trading at rs.200..will it be 200*75- 15000/-… ? Also for short selling it will the same be applicable?

  141. Anmol says:

    Please sign this petition on change.org – http://chng.it/P88jYfqS

  142. Amit Chaudhari says:

    Can I get the copy of guidelines and clarifications on margin collection and reporting in the context of this SEBI circular.

  143. Firoz says:

    Hi. Nithin
    Don’t you think there should be some difference in margin requirements for intraday (mis) and Nrml.what ever it might be??

  144. Shivansh Tripathi says:

    Hello Nithin sir

    1. As there will be no difference between intraday and positional in fno as same margins are required suppose I did some intraday trades and trade goes against me and to cover my losses I can even carry those position overnight and we all know overnight positions have unlimited risk.
    2. Due to all these damn rules most of the retail traders moves toward options and we all know all of them loss their Capital
    3. If u want to make changes apply in a decent manner either u can change leverage to 10x and slowly change the leverage so that market and retail with adjust to it…
    4.Every rule government make is for people benefit but the way it implemented is a disaster for people.

    retail trade will always suffer if they did not have knowledge but someone other groups are also suffering who had did their best to understand the marker….

  145. Punit says:

    I don’t know why no one is reading point number 20 of the NSE circular. Just read it! It clearly illustrates the case of an Intraday trade. So if leverages were to be reduced or removed, why would NSE illustrate an Intraday example with 10% margin???
    Please dear traders don’t mis-interprate this whole thing. Keep calm because leverage is here to stay 😬

  146. Rahul says:

    Stupid decision!! Intraday is all about picking few points with big positions. If they care so much about retailers why dont they introduce mini/micro future contracts? So everyone can be able to trade as per their wish and capital.

  147. Punit says:

    Funny thing noticed by me.
    NSE is planning for its IPO and has approached SEBI for it. So do you think NSE will kill its own revenue by not allowing leverages in Intraday? I think 70% of NSE’s revenues are generated by Intraday trades.

    • Matti says:

      This is a SEBI order, and once it comes into effect, all stakeholders will have to implement it.

      • amit says:

        Matti – As per your response, I think you work for Zerodha…

        Can you also let us know what happened on yesterday meeting between broker and SEBI?

        As per news, SEBI is ok with client margin if it is funded by broker and use for only intraday purpse?

  148. Prakash says:

    Hi @Nithin,

    Is there any decision yet on the leverage? Any updates from Exchange or SEBI?

  149. Punit says:

    SEBI is okay if the broker funds the clients with it’s own sources.
    So technically, leverages are to be continued, but only if you have a financially well capitalised broker.
    Am I right ?

  150. Vijay milan says:

    On 9th Jan sebi has approved brokers to fund the client for intraday trade with their own money if they want. There is a article on 9th on the same.. any comments on that…any update now on this. Now there should be no change in margin. Confirm on this news please

  151. Harvinder says:

    There is no circular issued by sebi regarding reduced leverage in derivative segment. Then why all discount brokers fooling people?

    • Ashish says:

      Right Harvindar
      there is no leverage reduce in derivative segment by SEBI.It is only in cash segment.any body simply visit SEBI site & see.only broker trying to make you fool.

  152. Ashish says:

    Yes,I too came to know through article on 9th january that broker can fund client leverage .so there is no ban on leverage.this news is everywhere in media & each & every trader
    has got this news.& now it is confirm that which broker gives full leverage as before all traders will shift to that broker.

  153. Sahil says:

    Hi Nihin sir can u plz tell when nse will start stock options weekly expiry.

  154. Trader says:

    1.This will force people towards option buying and we all know that 90 to 95% option buyers loses the money. In this case this move is very positive news for the option seller as participants will increase.
    2. Another point is, If you buy any future lot in NRML and its showing negative MTM in intraday..this will force the trader to carry forward the same trade for next day..and if next market gaps down….u know what will happen…. as per human psychology he will not book the loss he rather would carry that negative position till the expiray day and end up locking his money in that single trade only.

  155. Ashish says:

    Can you let’s us know the new margins required as per this rule for intraday trade.
    As zerodha margin calculator is still showing old calculations for leverages.

  156. Aashish says:

    SEBI is planning to lower margin system & increase leverage in derivative segment to increase liquidity in trading.means you will get more leverage in derivative segment.It is published on google today on 27th January 2020

  157. T ANAND PRABHU says:

    when the leverages may reduced from the brokers . I mean when sebi will release the circular to reduce the leverage ?

  158. SANTANU CHETIA says:

    SEBI has shelved the new margin rule . Traders can rejoice now.

  159. SANTANU CHETIA says:

    brockers shall continue giving Intraday leverage as per their extant policy . SEBI has shelved it’s stupid plan

  160. Amit says:

    Zerodha must say sorry to create a panic situation for their client… the way u behaved last one month, it is highly disappointed and I am sure u will lose valuable customer as you guys are exposed by supporting SEBI circular.

  161. Rahul says:

    Nithin,
    What Zerodha has to say now after this news?Still you support the earlier said circular?You guys really created a havoc amongst us.As a small retail trader,we are really panicked by this.Can you please clarify.

  162. Durga Prasad says:

    Sir when will SEBI reduce margin for hedging positions News came before 3 months that SEBI Given principle approval 3 months over but not yet implemeneted Is there any news regarding time line

    • Amit says:

      You can not get update from them as they are in silence mode. Do not ask them as they are master to spread false/panic news… they are the only company who creating confusion since January

    • Matti says:

      Hey Durga, there is no official announcement regarding this yet. You’ll know as soon as we know.

  163. Amit Sharma says:

    Nithin, go to your so called Kite, open Crude 5 mins chart and check today’s 10pm Candle. Open 3722, Close 3719. The difference should be -3 but as per KITE TRADING VIEW CHART IS -2 SO FOR YOU 19-22 IS -2 AND NOT -3. THIS IS THE WAY YOU ARE FOOLING TRADERS BY SHOWING WRONG CHARTS. HAVE TAKEN SCREENSHOTS TO SHOW THE WORLD.

  164. Sagar says:

    For intraday if I have 1lak capital…for now I’m getting 10times leverage…

    From tomorrow, how many leverage will be provided by zerodha on 1lack

  165. Siddharth says:

    anyhow as per data , 90% retail investors lose money … so restricting peoples from trading more using 10X or 20X of available margin is good move by SEBI.

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