This is an important change that all investors and traders must note. (Thread)
Assume you have only stocks, and have no balance with the broker. You can sell the stocks, but you can only use the money on T+2 - two days later.
Use the money = to buy other stocks, to place F&O trades. (Except one odd case: You can buy options, it seems)
Use the money = to buy other stocks, to place F&O trades. (Except one odd case: You can buy options, it seems)
For futures and options players only, this doesn't change. You can trade it like earlier - but intraday leverage is gone. So 20% margin means max 5x leverage (some players were offering intraday 10x etc, which will be removed)
People buying today need at least the margin required. Roughly 20% to 30%. Brokers like Zerodha take full amount for delivery trades anyhow. So sell Rs. 100 worth stocks and buy Rs. 100 worth other stock you will need Rs.100 in cash, to pay for it on the same day.
Some brokers can offset this by taking only 20% (or as per margin) to buy a stock, if you have "sells" in the pipeline - which means for a sell of Rs. 100 of stocks and buying Rs. 100 of more stocks on the same day, you will need only Rs. 20 of cash in your account.
Till such time, you'll have the same restrictions that mutual funds and PMSes do - you cannot buy until the cash is received in your accounts, so sell today can only mean buy two days later if you don't have any spare cash to rotate.
Impact starts August 1. Which has multiple implications. "BTST" products will have issues, because you can't sell on the next day. (Some brokers will have workarounds on some stocks, but not all)
Also all your backtests go for a toss if you can't sell and buy other things on the same day. Essentially, you're going to need extra money in a cash balance.
The famous strategy of parking cash in liquidbees won't easily work. Selling it will mean waiting for two days to use the money to buy stocks.
What you should do: Simply keep money in a bank account, or use the stocks you own for a loan against securities, which you can withdraw on demand for a two day period.
Leverage is now explicit instead of being implicit - for two days that is.
Leverage is now explicit instead of being implicit - for two days that is.
