Zerodha will change the way it releases margins on equity F&O maturity

Zerodha has introduced a change in the way it releases margins on equity derivatives maturities, a move that is expected to ease capital constraints for active traders operating in both the equity and commodity markets. The brokerage announced that the margins locked for equity F&O positions will now be released shortly after the close of the cash market, with the funds available around 4 p.m.Until now, these margins often remained locked for several hours after expiration, limiting traders’ ability to redeploy capital in the commodities segment, which trades late into the evening.

“We are changing the way we handle the margins at maturity of F&O shares. Instead of keeping them locked after maturity, the margins are now released after the market closes (by 4pm). That means if you trade commodities, you can use the released margins in the commodities segment,” the broker said on X.

Expirations typically see a spike in intraday volatility, rollovers, and position adjustments as traders balance or transfer index and stock futures. Under the previous system, even after positions were closed or expired, margins remained frozen until clearing companies processed settlement files.

This meant that traders looking to move into MCX positions for the night session would have to hold separate capital or rely on additional buffers. Zerodha’s updated process aims to remove this friction by synchronizing margin release with the end of the trading session.

Margins act as collateral that is collected in advance to manage risk across all trading segments. Since Sebi’s peak margin framework was introduced in 2020, brokers have been required to collect higher intraday margins and maintain stricter risk buffers.

While the rules have strengthened market stability, they have also increased demand for working capital among derivatives traders. Against this backdrop, a faster release of blocked funds becomes particularly valuable. The ability to reuse margin on the same day is expected to benefit traders who employ cross-segment strategies. Commodity markets, especially crude oil, natural gas and metals contracts on MCX, remain active until 11:30 PM, offering additional trading windows after the stock markets close at 3:30 PM.

Many traders typically shift their exposure from equity F&O to commodities on expiration days, but a delayed margin release often forces them to take smaller positions or delay the early part of the commodities session.