BTST stands for “Buy Today, Sell Tomorrow”, 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 mitigates such requirements as it is a facility by Zerodha to allow customers to sell shares the next day i.e. T+1 day without even having it in the Zerodha Demat Account 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.
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. BTST trading is not allowed on Trade to trade stocks, stocks under ASM (Additional Surveillance measures) and GSM (Graded surveillance measure).
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 Charges|
|BTST Buy Brokerage||Free|
|BTST Sell Brokerage||Free|
Till 2nd 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 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 1st 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;
|Trading Day||Trading value||BTST Margin|
|T Day||Rs. 20,000||Rs. 12,000 (Rs.20,000*60%)|
|T+1 Day||Rs.30,000||Rs. 18,000 (Rs.30,000*60%)|
|Total margin||Rs. 30,000|
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.
BTST penalty in Zerodha may range from 0.50% to 1% depending upon the amount of margin shortfall.
|Margin Shortfall||Penalty rate|
|< Rs. 1 lakh and <10% of applicable margin||0.5%|
|= Rs. 1 lakh and = 10% of applicable margin||1%|
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.
Trading itself is risky and when we talk about BTST trading, the following risks must be counted;
Last updated on 20th Jul 2021
Zerodha customers can do BTST trading through the Kite Mobile App or Kite web platform. Notably, BTST trading is only allowed on the equity delivery trading through the below steps;
To convert MIS to BTST, you need to convert MIS order to CNC because BTST trade is only allowed in the equity delivery segment using CNC product type.
Steps to convert MIS to BTST in Zerodha
Zerodha, India’s largest discount brokerage firm allows its customers to do BTST trading. The facility enables users to buy shares today and sell it on the next trading day without holding the shares in the Demat account. BTST trading is only available on the CNC means delivery trading. BTST trading is not available on Trade to trade stocks, stocks under ASM and GSM.
As Zerodha offers free delivery trading hence, BTST trading in Zerodha is available for Free at 0 brokerage charges. However, you have to pay STT, exchange transaction charges, GST, stamp duty, and other charges.
Further, after the new upfront margin rules by SEBI, you have to pay Rs. 13.5 + 18% GST on BTST trades.
As per SEBI’s new margin rules, customers have to maintain 20% of equity delivery trade value as the margins, and sometimes, an exchange may also levy additional Adhoc margins on several stocks. If in any case, a customer does not maintain the required margin in his account then he will be charged with a peak margin penalty or margin shortfall penalty of 0.50% to 1%. Whenever you place an order on Kite, it shows a Nudge about the margin penalty to aware investors to keep the required margin in their account so as to avoid any margin shortfall.
Yes, Zerodha levy Rs. 13.5 + 18% GST DP charges on all BTST trades executed on the Kite w.e.f. June 2021. Earlier, BTST trading in Zerodha was free at no DP charges but later as the new settlement process was introduced by CCIL, all customers have to pay DP fees.
No, Zerodha doesn’t allow STBT (Sell Today, Buy Tomorrow) trading facilities to customers as it is prohibited in the Indian market. STBT is just the opposite of BTST wherein you can sell the stock today in the cash segment without even holding it in the Demat Account and buy it later on the next trading day. Zerodha customers can’t do STBT trades.