Zerodha BTST Explained (Charges, Margin Penalty, Brokerage)

Published on Saturday, June 12, 2021 by Chittorgarh.com Team | Modified on Tuesday, June 20, 2023

Alert: 20 June 2023

Zerodha has announced that it will be discontinuing BTST trading on June 17, 2023. This decision was made in accordance with SEBI's recommendations.

Zerodha offers its customers the BTST facility to sell the stocks before receiving the credit in the Demat account on T+2 and take advantage of short-term volatility and book profits. To place BTST orders in Zerodha, you need to use the product type - CNC (Cash and Carry) used for delivery trading.

For BTST trades, you have to buy the stock using the Long-term CNC (Equity Delivery) product type and the next day sell them using the Longterm CNC (CashNCarry that requires upfront margin in full) product type.

BTST Charges in Zerodha is Rs 0 as equity delivery traders are offered brokerage-free at Zerodha.

Almost all stock brokers in India offer BTST (Buy Today Sell Tomorrow) facility. It is also known as ATST or Acquire Today, Sell Tomorrow. BTST is allowed in Zerodha.

BTST Zerodha Charges

The charges for BTST in Zerodha are Rs 0 (free). The BTST facility is available when you buy shares using the CNC product type (equity delivery segment) that is brokerage-free at Zerodha.

There are no brokerage charges on BTST trades in Zerodha as these get traded with CNC product type used for Equity Delivery. However, you need to pay the applicable regulatory fees and taxes like STT, Stamp Duty, GST Exchange Transaction Tax, and SEBI charges.

The only difference in the charges for BTST and Equity Delivery trades is of DP charges. There are no DP charges applied for the BTST transactions as the shares get sold before they hit the Demat account.

BTST Stocks in Zerodha

Zerodha does not maintain a specific list of BTST stocks. However, it blocks your trade if the stock is not allowed for BTST with an error as 'Intraday/BTST is not allowed in scrip. You will be able to sell after the stock is delivered to your account.'

Generally, all stocks are allowed for BTST trading in Zerodha except for the shares under:

• T2T (Trade for Trade) segment
• GSM (Graded surveillance measures) by NSE/BSE
• ASM (Additional surveillance measures) by NSE/BSE.

Zerodha maintains a consolidated list of scrips on their company website under Downloads and Resources that provides information on stocks blocked or allowed by Zerodha Risk Management Systems (RMS). The list is segregated based on various parameters viz. scrips under T2T, GSM, ASM, MIS, BO/CO, and unsolicited SMS scrips blocked.

BTST Leverage in Zerodha

There is no leverage provided for BTST trading in Zerodha. You need to maintain 100% of the trade amount as margins.

With the new upfront margin requirement rule rolled out by SEBI in September 2020, a broker needs to collect 20% of trade value for all the trades executed by a client. Thus, if you sell your stock on T+1, you need to maintain 20% of the sell trade value as margins on T+1. In some cases, an exchange may also levy additional adhoc margins of more than 20% on some stocks. If you do not maintain sufficient margins, your ledger gets debited with a margin penalty for the shortfall amount.

Example of Margin for BTST in Zerodha

If you purchase 1,000 shares of ABC stock of Rs 10 each, your margin requirement for T Day would be Rs 2,000 (20% of trade value). Zerodha blocks the entire trade value on T Day of Rs 10,000 of which 2,000 is the margin requirement. If you sell the stock on T+1, say at Rs 15, the margin requirement for T+1 would be Rs 3,000 (20% of trade value).

Thus, the total margin requirement for T and T+1 would be Rs 5,000. This margin would get covered as part of Rs 10,000 blocked on T-day.

If the exchange levies an additional margin of 50% on the above stock, then the margin requirement would be:

• On T-day: Rs 7,000 (70% of the buy value of Rs 10,000)
• On T+1 day: Rs 10,500 (70% of sell value of Rs 15,000)
• Total margin requirement for both days: Rs 17,500

If you do not maintain sufficient funds in your account to cover an additional Rs 7,500, you may get charged with a margin penalty to the extent of the shortfall. Zerodha also gives a warning in the form of the Nudge feature to make the investors of the situation.

BTST Penalty in Zerodha

BTST penalty charges in Zerodha are 0.5% to 1% of the margin shortfall amount in case of insufficient margins on T+1 day for BTST trades.

BTST trading also carries a risk of Short Delivery as you sell the stock on T+1 without receiving it in your Demat account. If you do not receive the entire quantity of stock on T+2 against your buy trade, you will not be able to fulfill your sell obligation. Thus, you run the risk of an auction penalty which can be up to 20% of the value of stock short delivered.

STBT in Zerodha

STBT (Sell Today, Buy Tomorrow) is the reverse of BTST. It is a facility that allows traders to sell the shares in the cash segment (shares that are not in his demat account) and buy them the next day.

Zerodha does not offer STBT trading. STBT is prohibited in the Indian Stock Market. Zerodha customers cannot sell shares if they do not have them in your demat account.

Note, Zerodha offers F&O trading in Equity and Commodity. You could use call & put options to simulate STBT. But only a few companies are available for options trading.