Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Intraday Margin Likely to Increase Sharply Even for Cover & Bracket Orders

46 sec read

In the recent circular, issued by NSE and BSE it is clarified that brokers have to collect additional intraday margins for equities & derivatives (Equity, Commodities, Currencies). This new regulation seems to be applicable even for exotic leveraged tools like cover orders & bracket orders.

Currently, brokers charge only VAR margins for Intraday Equity trades which will soon likely be VAR + ELM margin. And for FNO trades it is likely to be Initial Margin (Span + Exposure Margin) for intraday trades has to be collected upfront from the trader.

These newer regulations directly affect the traders & brokers community. It is negative news for the traders who looking for higher leverage to boost up their returns.

This Increase in margin will push more traders towards Option Buying or Short term Investing Strategies as higher margins reduce the liquidity supply from the retail segment.

Intraday based portfolio level algo traders/Systematic Traders are also the impacted ones.

Expiry Day Option Sellers are the most impacted ones as it simply destroys the higher returns the intraday option sellers make on those expiry day trades.

Overall, Controlled greed is good as it protects many entry-level traders from taking bigger leverage and thereby brings reasonable expectations in the markets.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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