What does the 'delivery margin' field on Zerodha Kite mean?
When selling securities from a demat account, the delivery margin, which amounts to 20% of the value of the stocks sold, is blocked. As per SEBI's new peak margin norms, only 80% of the credit from selling holdings will be available for new trades. The funds blocked under this category will be released and made available from the next trading day. To learn more, see Why is full credit not being received against the sell value of the holdings?
Example Scenario
Let's assume that 50 shares of ZEEL have been sold at ₹211.15 each. The total value of the holdings sold is ₹10,557.50, calculated by multiplying 50 shares by the price per share of ₹211.15 (excluding charges).
Out of the ₹10,557.50, 80% credit (₹8,446) is available as a negative balance under the used margin field. This negative used margin can be utilized for other trades. The remaining 20% credit (₹2,111.50) is blocked under the delivery margin field, as displayed below:
The delivery margin also includes an additional margin blocked if the F&O positions are due for physical delivery. To learn more, see Why is higher than usual margin blocked for my F&O trades close to expiry?
Related articles
- What is a margin penalty, and why is it charged?
- What are margins and how can margin shortfall occur?
- What is Value at Risk (VAR), Extreme Loss Margin (ELM), and Adhoc margins?
- Why is higher than usual margin blocked for my F&O trades close to expiry?
- What is a daily margin statement, and how to understand it?
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As an enthusiast with a deep understanding of financial markets and trading platforms, I can confidently delve into the topic of the 'delivery margin' field on Zerodha Kite. My expertise is grounded in a comprehensive knowledge of securities trading, margin requirements, and regulatory frameworks such as those outlined by SEBI.
The 'delivery margin' is a crucial concept for those engaging in selling securities from a demat account through Zerodha Kite. This margin is set at 20% of the value of the stocks sold. The implementation of this margin is in line with SEBI's peak margin norms, which dictate that only 80% of the credit from selling holdings will be available for new trades. This regulatory measure aims to ensure prudent risk management and safeguard the interests of market participants.
The funds blocked under the 'delivery margin' category are temporarily held and will be released, becoming available for use from the next trading day. This process is designed to manage risks associated with unsettled trades and potential market fluctuations.
In the provided example scenario, where 50 shares of ZEEL are sold at ₹211.15 each, the total value of the holdings sold is ₹10,557.50. Out of this amount, 80% credit (₹8,446) is available as a negative balance under the 'used margin' field. This negative used margin can be utilized for other trades. However, the remaining 20% credit (₹2,111.50) is blocked under the 'delivery margin' field.
It's noteworthy that the 'delivery margin' may also include an additional margin if the F&O (Futures and Options) positions are due for physical delivery. This aligns with the broader regulatory framework and risk management practices in the financial markets.
For a more detailed understanding, users are directed to related articles that cover topics such as margin penalties, causes of margin shortfalls, and concepts like Value at Risk (VAR), Extreme Loss Margin (ELM), and Adhoc margins. Additionally, there is information on why higher-than-usual margin may be blocked for F&O trades close to expiry.
In conclusion, the 'delivery margin' on Zerodha Kite is a critical aspect of trading, influenced by regulatory norms and designed to manage risks associated with selling securities. Understanding these concepts is essential for traders to navigate the platform effectively and make informed decisions.
