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What changes due to the new upfront margin requirements?

Upfront margins are required for all trades starting from September 1, 2020, as per this FAQ from exchanges and this circular from SEBI. This has the following effects:

  1. Sale proceeds from holdings can be used to take new positions - You can continue using the full value of sale proceeds from your stock holdings as soon as you exit them to enter new positions — other stocks or F&O positions. While you might hear that this isn’t allowed at some other brokerage firms, nothing will change for our customers.
  2. Using sale proceeds from T1 holdings - Similar to your stock holding, you can sell the T1 holdings (stocks bought the previous day and yet to be credited to your demat) and use the entire value of the proceeds to buy new stocks for delivery. However, you will be able to use only 60% of this selling value towards F&O. Learn more.
  3. Intraday profits can be used for new positions only after it is settled - Your Kite balance will not include any intraday profits until they are settled by the exchange. The settlement of funds happens on the next trading day for F&O and after 2 trading days for equity. However, you can continue to see the funds from intraday profits in the closing balance on your Console ledger.
    For example - On Monday, you buy stocks worth Rs 2 lacs and sell them the same day for Rs 2.25 lacs, then Rs 2 lacs will remain available immediately for other transactions. However, Rs 25 thousand will be available in your Kite funds on Wednesday. 
  4. Option sell credit can be used only to buy options on the same trading day - When you exit your long/buy option positions or enter new write/short options, the proceeds or credit of option premium can be used for only new long/buy option trades on the same trading day and only within the same segment (proceeds from equity options can’t be used for currency or vice versa). You can use this proceeds or option credit for all other types of trades only from the next trading day.
Note that the account balance on Console may not match with Kite balance. Your Kite balance will not include unrealized intraday profits until they are settled, while Console will show balance including intraday profits.

You can check this video for an explanation of the above points: 


Click here to watch the video in Hindi.

You can post any follow-on questions in this Trading Q&A thread.