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Why was an email and SMS sent by the clearing corporation informing about the allocation of funds?

The Clearing Corporation (CC) sends emails and SMS to comply with the SEBI guidelines (WEB). As per the regulations, stockbrokers are required to allocate client funds segment-wise with the CC. This means that the balance maintained with Zerodha will be segregated and allocated segment-wise depending on the trades and margin utilisation. The clients are not required to take any action because the email and SMS are sent only to inform them of their segment-wise allocation.

Example Scenario

  • If the balance with Zerodha is ₹1,25,000, the funds can be used to trade in any segment. However, if a trade is taken in the EQ segment, where stocks worth ₹1,00,000 is purchased, the broker needs to allocate ₹20,000 (20% of ₹1,00,000) to the EQ segment with the CC, and ₹1,05,000 will get allocated to the FO segment. The balance amount will be allocated to the FO segment even if the FO segment is inactive or no trades were made in the FO segment.
  • If the balance with Zerodha is ₹1,25,000, the funds can be used to trade in any segment. However, if no trades are taken in any of the segments, ₹1,25,000 will fully be allocated to the F&O segment. However, clients can still use the funds to trade across segments.

The CC then notifies the client of the allocation made by the broker in different segments.