Zerodha, Grow, and Angel One Lead the Way in Instant Fund Credit
Introduction: If you are a stock market trader, exciting changes are coming your way! A major update from broking platforms like Zerodha, Grow, Angel One, and Five Paisa will make trading much smoother. Now, when you sell shares, your funds will be credited to your trading or demat account instantly, a change from the previous system where only 80% of the sale proceeds were available right away. Let’s dive into how this will benefit traders and investors.
Instant Fund Transfer After Selling Shares
The latest development, which took effect on Monday, ensures that the entire amount from selling shares will be available in your trading account immediately. Previously, under the system introduced by SEBI, only 80% of the sale proceeds were credited instantly, with the remaining 20% held as an upfront margin. This balance was credited the next day. Now, with this new policy, traders will receive the full amount of their share sale as soon as the transaction is completed.
Example: How This Change Affects Your Trading
Let’s break down how this works with a simple example. Suppose you own 100 shares of a company priced at ₹1,000 per share. Under the old system, if you sold these shares, you would have received ₹80,000 immediately (80% of the sale value) and the remaining ₹20,000 the next day. But now, with the updated rules, you will receive the entire ₹1 lakh (₹100,000) in your account at once. This allows traders to reinvest the full amount immediately, without any delay, boosting trading efficiency and cash flow.
Benefits of Immediate Fund Credit for Traders
This change is expected to significantly benefit stock market traders, as it will improve liquidity and help investors avoid cash flow issues. The immediate availability of funds allows for reinvesting the full amount quickly in other trades, whether in stocks, futures, or options. The removal of the 80% rule provides traders with full access to their capital after each transaction, enabling them to act on new opportunities without waiting for funds to clear.
The History of the 80% Rule and SEBI’s Regulations
The 80% rule, introduced by SEBI in 2020, was implemented in stages and fully came into effect by September 2021. This rule was designed to maintain an upfront margin requirement for traders, ensuring market stability. However, with growing demand for faster fund settlement and improved trading efficiency, SEBI has now allowed brokerage platforms like Zerodha to implement this more trader-friendly policy.
Exceptions for Buy Today Sell Tomorrow (BTST) Traders
While this new policy is excellent news for regular traders, it’s important to note that the immediate fund credit does not apply to Buy Today Sell Tomorrow (BTST) trades. Under BTST, the funds from a share sale will only be available for trading the following day. BTST is a popular strategy that allows investors to capitalize on short-term price movements without holding shares for an extended period, but it still requires a one-day waiting period for fund availability.
Market Share and Growth of Stock Brokers
Leading stock brokerage platforms like Grow, Zerodha, and Angel One are highly competitive in the Indian market. In terms of NSE active clients, Grow currently holds the top position with a 25% market share. Zerodha, once the market leader, has seen its share drop to 17.1% as of July, placing it in second position. Angel One follows closely with a 15.3% share of the market. Despite Zerodha’s decline in market share, this new policy could help it regain momentum by offering enhanced benefits to its customers.
Conclusion
The new policy of immediate fund availability after selling shares is a game-changer for traders who rely on quick fund access for reinvestment. By removing the 80% upfront margin rule, this change will make trading more efficient and improve liquidity for investors. Platforms like Zerodha, Grow, and Angel One are leading the charge in offering this benefit, making trading faster and smoother for their users. However, traders utilizing BTST strategies should remember that this policy does not apply to them, and their funds will be available the next day.