On July 20, 2020, SEBI issued a circular on peak margin and fixed the leverage margin for all stockbrokers in India. As per this circular, stockbrokers are not permitted to offer margins higher than the defined cap to their customers. This move by SEBI is aimed at curbing the practice of offering high margins of up to 40X to attract new customers.
As a result, even popular brokers such as Zerodha and Alice Blue are now offering a maximum of 5X margins on intraday trading. This ensures a more controlled and regulated trading environment for investors in the Indian stock market.
Zerodha Intraday Leverages
Zerodha provides leverage in two different products:
- MIS (Margin intraday square off)
- CO (Cover Order)
Both in MIS and CO, Zerodha provided up to 5 times (20% margin) leverage for intraday for equity.
For example, if you have Rs 1,00,000 in your trading account then you can purchase or sell stock worth up to Rs 5,00,000 for intraday trading.
Due to peak margin rules by SEBI, there is no leverage offered for equity F&O, currency, and commodities segments.
Zerodha Intraday leverages – MIS & CO
|Segment||MIS Leverage/Margins||Cover Order Leverage|
|Index F&O||1X (100% of NRML margins(SPAN + Exposure))||Not applicable|
|Stock F&O||1X (100% of NRML margins(SPAN + Exposure))||Not applicable|
|Currency Futures||1X (100% of NRML margins(SPAN + Exposure))||Not applicable|
|Commodity Futures||1X (100% of NRML margins(SPAN + Exposure))||Not applicable|
You can calculate the margin available for a stock on the Zerodha margin calculator.
General Instructions regarding peak margin
- 75% of the holdings selling benefit (subject to revision) is allowed immediately on T day for further trade in any product in any segment.
- MIS (Margin Intraday Square-off) is allowed for all commodity scrips/contracts, except for option commodities and agricultural commodities.
- Market to market (MTM) losses on any intraday product must be cleared on a T+2 days basis. Failure to do so will result in a short-margin penalty charged by the exchange.
- Intraday MTM profits cannot be used on the same day.
- The margin released due to carry forward options can be used on the same day.
- There will be no immediate margin release from BTST (buy today, sell tomorrow) holdings square off, and a 30% upfront margin or VAR (Value at Risk) margin, whichever is higher, is required.
Intraday Margin (MIS/CO) Square-off Timings
|Item||Equity/Cash||Equity derivatives||Currency futures||Commodity|
|Intraday Margin Time (MIS and CO)||3:20 PM onwards||3:25 PM onwards||4:45 PM onwards||25 minutes before Close|
Let’s understand Zerodha leverage for each segment
#1. Equity Segment
For MIS Orders
MIS (Margin Intraday Square-off) which means that positions opened during the day are automatically squared off before the market closes. MIS is a type of leverage provided by Zerodha for intraday trading, allowing you to buy or sell stocks with a smaller margin amount.
Zerodha offers 5X leverage on equity Intraday which means if you have Rs 1,00,000 in your trading account then you can buy stocks only worth Rs 5,00,000.
Equity future & Options
Zerodha offers zero leverage or 1X leverage for equity futures & options trades. This means you must have sufficient margins in your accounts before taking a position in equity futures or options.
#2. Commodity Segment
In MCX (Multi Commodity Exchange), you can trade various commodities such as gold, silver, and crude oil.
Zerodha provides 1X leverage for the commodity trades, which means you need to have the required margins in your account to execute commodity trades.
#3. Currency Segment
CDS (Currency Derivatives Segment) is a stock market platform where you can trade in currency derivatives futures and options.
You get 1X leverage for the currency segment trades which means you must have the required margins in your account to execute currency trades.
To understand the concepts of call and put options thoroughly, you may like to read What are CE and PE in options trading.
|Segments||Zerodha Brokerage Plan|
|Equity Delivery||Rs 0 (Free)|
|Equity Intraday||0.03% or Rs. 20 per executed order whichever is lower|
|Equity Future||0.03% or Rs. 20 per executed order whichever is lower|
|Equity Options||Rs. 20 per executed order|
|Commodity Futures||0.03% or Rs. 20 per executed order whichever is lower|
|Commodity Options||Rs. 20 per executed order|
|Currency Futures||0.03% or Rs. 20 per executed order whichever is lower|
|Currency Options||Rs. 20 per executed order|
To explore other options available in the market, you can refer to our research report on the top 20 stock brokers in India.
Leverage in trading refers to the ability to trade with borrowed funds. It allows traders to increase their exposure to the market and potentially earn higher profits with a smaller amount of capital.
Zerodha provides leverage through two products – MIS (Margin Intraday Square-Off) and CO (Cover Order).
Used margin in Zerodha refers to the amount of capital that is utilized for your executed equity intraday, F&O positional /intraday trading & delivery orders including your open positions.
Zerodha provides up to 5 times (20% margin) leverage for intraday trading in equity through both MIS and CO.