Zerodha BTST Explained (Charges, Margin Penalty, Brokerage)

Published on Saturday, June 12, 2021 by Chittorgarh.com Team

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Zerodha BTST Explained (Charges, Margin Penalty, Brokerage)

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 Zerodha Brokerage

Transaction

Brokerage

Buy BTST Transaction

Rs 0 (Free)

Sell BTST Transaction

Rs 0 (Free)


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.

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Free Equity Delivery Trading and Mutual Funds

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  • Brokerage-free Direct Mutual Fund investment +
  • Trade with the best trading platform in India.

This is a limited-time offer. Open Instant Zerodha Account online and start trading today.

Frequently Asked Questions

  1. 1. What is BTST in Zerodha?

    BTST in Zerodha is the facility offered to investors to sell the stocks (bought on T day) before receiving its credit in the Demat account (on T+2 day).

    Zerodha offers free BTST trading. There are no brokerage charges on BTST trades as it gets treated at par with Equity Delivery trading. However, you need to pay other regulatory taxes applicable to the transaction. To do BTST trading in Zerodha, you need to place orders using the CNC product type.

    With the BTST facility, you can take advantage of the price volatility and sell the stocks without waiting for T+2 days.

     

  2. 2. Is BTST safe in Zerodha?

    Zerodha offers its client brokerage-free BTST trading. Zerodha RMS tracks scrips under T2T, GSM, ASM, and other highly illiquid scrips where the chances of shortfall delivery are higher and reject such orders. It also provides its customers a warning in the form of a Nudge feature to check for sufficient margins maintained for BTST trading. Thus, though it is safe to do BTST in Zerodha, you need to be cautious of the slight risk of shortage in delivery in some scenarios for which BTST trading is allowed.

     

  3. 3. How to activate BTST in Zerodha?

    There is no specific requirement or separate approval required to activate BTST in Zerodha. You need to have a trading and Demat account with Zerodha and sufficient margins to place BTST orders.

    You can place BTST orders in Zerodha using the CNC product type while buying the stock on T-day and selling the stock on T+1 day.

     

  4. 4. How to do BTST in Zerodha Kite?

    You can do BTST trading in Zerodha through the Zerodha Kite website or Kite mobile app. You need to follow the same process as you do in the case of Equity Delivery trading.

    Steps to put BTST order in Zerodha

    1. Login to Zerodha Kite.
    2. Add the desired scrips to your watchlist.
    3. Select the scrip for BTST trading.
    4. Click on Buy.
    5. Input the quantity and price.
    6. Select the product type as CNC.
    7. Select the order type as desired.
    8. Set stop-loss and target if required.
    9. Set trigger if applicable and required.
    10. Swipe to Buy or click on buy to confirm the order.

    Once the order gets executed, you can do BTST by selling the stock using CNC product type on the next day.

    It is important to note that the stocks under T2T, GSM, and ASM are not allowed for BTST trading in Zerodha.

     

  5. 5. How to convert MIS to BTST in Zerodha?

    The BTST orders in Zerodha get placed with CNC product type. You can convert the MIS buy orders placed on T day to CNC so that you can sell the stock on T+1 if you have sufficient margins in your account.

    Steps to convert MIS trades to BTST in Zerodha:

    1. Login to Zerodha Kite.
    2. Go to the Positions tab.
    3. Select the stock that needs conversion.
    4. Click on the three-dotted lines in the Kite website OR scroll down in Kite mobile app to look for the Convert position
    5. Click on convert.

    You can either convert the entire position or part position to CNC as desired.

     

  6. 6. How to Buy BTST in Zerodha?

    You could buy BTST in Zerodha through the Zerodha Kite website or Kite mobile app. Follow the steps below to buy/sell stocks in BTST with Zerodha.

    Steps to Buy BTST in Zerodha

    1. Login to the Zerodha trading website or mobile App.
    2. Add the desired company to your watchlist.
    3. Click on the Buy button.
    4. Input the quantity and price.
    5. Select the product type as Longterm (CNC).
    6. Place the order.

     

  7. 7. How to sell BTST in Zerodha?

    You can do BTST in Zerodha by selling T1 holdings on T+1 using the product type CNC.

    You can sell the stocks using the BTST facility only when the scrip is not under T2T, GSM, or ASM. You also need to maintain sufficient margins to sell the stock on T+1 to cover the upfront margin requirement and additional ad-hoc margin (if levied) by the exchange.

     

  8. 8. How to put BTST order in Zerodha?

    To put BTST order in Zerodha, you just have to buy the stock using the Longterm CNC (Equity Delivery) product type and sell them the next day using the Longterm CNC (CashNCarry) product type.

    Note that CNC orders require an upfront margin in full. Zerodha BTST brokerage charges is Rs 0 (free). BTST trades are Equity Delivery trades that are brokerage-free at Zerodha. You pay only government taxes and exchange charges for BTST trades.

     

  9. 9. How to place BTST in Zerodha?

    To place a BTST order in Zerodha, you have to log in to the Kite website or mobile app and place a buy order using the Longterm CNC product type. You can sell these shares the next day using the same CNC product type or take the delivery of them in your demat account.

    Zerodha BTST charges are Rs 0. That means you don't pay any brokerage for BTST trades with Zerodha. You only have to pay taxes and exchange transaction fees.

     

  10. 10. Can you do BTST in Zerodha?

    Yes, you can do BTST trading in Zerodha. The BTST (Buy Today Sell Tomorrow) facility is available to all customers. Customer requires a full upfront margin for BTST trades as they have to choose CNC (CashNCarry) product type while placing the order.

    BTST brokerage charges in Zerodha is Rs 0 as these trades are considered as trades in the equity delivery segment that are offered brokerage-free.

     

  11. 11. Can we do BTST in Zerodha?

    Yes, you can do BTST in Zerodha using the CNC product type.

    You need to have a trading and Demat account with Zerodha and sufficient margins for BTST trading. Zerodha does not offer any leverage for BTST trading. You need to maintain 100% of the trade amount and additional funds to cover any additional ad-hoc margins if applicable on your trade. For easy reference, Zerodha maintains a list of stocks where BTST margins are more than 100%.

     

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1 Comments

AyNyl
1. AyNyl  Jul 12, 2021 10:14 I Like It. | Report Abuse Reply
Sorry but this article no longer holds true you will be charged DP on Zerodha on your t1 stock holdings, DP charges also tend to stack in case you have multiple entries and exits on same security








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