Zerodha BTST trading, Features, charges, margin

BTST stands for “Buy Today, Sell Tomorrow”. It is a facility by Zerodha that allow customers to purchase stocks today and sell them very next day i.e. T+1 day without even having it in the Zerodha Demat Account. The BTST trading feature allow customers to book profit from short-term price volatility. Let’s check out the complete process on how to execute BTST in Zerodha, BTST trading brokerage, DP charges, BTST margin requirement, penalty charges, and more.

Notice: With effect from 19 June 23, you cannot use the sale proceeds from the sale of T1 holdings (BTST trades) on the same day. Now, you can only use the funds once the shares are settled.

What is BTST in Zerodha?

BTST trading in Zerodha is a facility to buy shares in the cash or equity delivery segment using CNC (Cash N Carry) product type today (T) and sell it on the next trading day (T+1 day) without even receiving actual delivery of shares in T+2 Days.

In India, the settlement cycle is T+2 Days means shares bought on T day i.e. Monday will be credited to your Demat account on T+2 days i.e. Wednesday and the client can sell shares only if it is available in the Demat account. However, BTST trades mitigate such requirements as you can sell stocks on T+1 day.

Zerodha BTST Trade Order

If you have a demat and trading account in Zerodha, follow these steps to place a BTST trade order on the Kite;

1. Login to the Zerodha Kite.
2. Select the desired scrip and click on the buy button.
3. Set the Stock Quantity and price.
4. Now choose the CNC (Cash N Carry) product type.
5. Select the order type be it market, limit, or stop-loss order.
6. Now confirm your order by swapping the big green button.

Once your order successfully gets placed, you can sell that shares on the immediate next day or (T+2) day.

Zerodha BTST Brokerage Charges

BTST trading in Zerodha is absolutely free means customers can place BTST orders in the equity delivery trading segment using CNC as a product type at nil brokerage fee. Although, the discount broker offers free BTST trading, but you have to pay the applicable regulatory charges such as stamp duty, taxes, exchange transaction tax, SEBI charges, and STT.

Zerodha BTST DP Charges

Till 2^nd June 2021, there were no DP charges on BTST trades but now, after the new settlement process introduced by the Clearing Corporation of India, Zerodha levies DP charges of Rs. 13.5 + 18% GST on all the BTST trades.

Zerodha BTST Margin/Leverage

Zerodha doesn’t offer margin on BTST trade and the full amount (100%) of the trade value must be maintained in your Trading account. As per the upfront margin rules applicable from 1^st Sep 20, 20% of the equity delivery trading value must be collected by the broker as upfront margin. In some cases, the exchange may also levy additional margins termed as “Adhoc margins” of above 20% on the stock. So, before doing BTST trades, a customer must keep enough balance or margin in his account otherwise, in case of any shortfall, you may charge with the margin shortfall penalty.

Let’s understand the BTST Zerodha margin requirements clearly.

Suppose, you bought 2,000 shares of a company at a price of Rs. 10 each, hence the total trade value will be (2,000*10) = Rs.20,000. Zerodha restricts or blocks the full amount of Rs. 20,000 and out of which, 20% means Rs. 4,000 will be kept as margin on T Day. Now, if you sell shares on T+1 Day at Rs. 15 each means (2,000*Rs.15) = Rs. 30,000 and again, 20% means (30,000*20%) = Rs. 6,000 will be the margin required.

Hence, the total margin required for the BTST trade executed will be Rs. 4,000 (T Day) + Rs. 6,000 (T+1 Day) = Rs. 10,000. Now, assume the exchange further charges an Adhoc margin of 40% then the total margin will be 20% (Zerodha) + 40% (Exchange) = 60%. Here, in that case, the total BTST margin required will be calculated as follows;

Note: If the Adhoc margin by the exchange is more than 30% then the margin required will be greater than the 100% amount of original trade value. Here, in the above example, BTST margin requirement of Rs. 30,000 exceeds the trade value of Rs. 20,000. If a client does not have sufficient balance in his trading account, then a margin shortfall penalty will be applicable. Zerodha shows a Nudge feature on its order placing a window on the Kite to warn investors about sufficient balance in his account to avoid margin shortfall penalty.

Zerodha BTST Stocks

There is no specific list of stocks available for BTST trading with Zerodha. Generally, all stocks are available for BTST trades except the following;

• Scrips in Trade for Trade (T2T) category
• Stocks under the GSM or ASM (Graded Surveillance measures) and Additional Surveillance measure

If a customer places BTST order for stocks in the above category, the order will be automatically rejected as intraday/BTST is not allowed.

BTST Vs STBT

STBT (Sell Today, Buy Tomorrow) is the opposite of BTST trades wherein you sell stocks first and buy them later. In India, only BTST trades are allowed to purchase stocks in the cash or in the futures & options segment.

As per SEBI’s regulation, no stock broker in India offers STBT trades.

Zerodha BTST Penalty

BTST penalty in Zerodha may range from 0.50% to 1% depending upon the amount of margin shortfall.

Note: Penalty at the above rates will be charged on the amount of shortfall and subject to applicable GST (Currently 18%). If the short collection of margin is persistent for 3+ consecutive days then a 5% penalty will be charged.

Zerodha BTST Risks

Trading itself is risky and when we talk about BTST trading, the following risks must be counted;

• Margin shortfall penalty: If a trader does not have sufficient margin required in his account then will have to pay a shortfall penalty.
• Short Delivery Risk: As BTST trade means buying the stock today and selling it the next day without even having it in the Demat account so the risk of short delivery exists. It is because, if a client does not receive the full quantity of shares from the seller on T+2 days then up to 20% auction penalty can be charged for the short delivery of stock.