₹1.43 lakh crore. That is how much Indian investors had borrowed from their brokers to hold shares on 25 August 2026, according to Business Standard, up 53% in a year.
Search for SEBI’s margin rules this year and most of what comes back describes a 2020 framework built to take cheap leverage away from retail traders. It did take one kind away. Since September 2021, no broker can let you buy ₹10 of shares intraday with ₹1 of your own. The borrowing moved instead: into options, where SEBI’s own data places 92% of individual traders’ losses, and into overnight margin loans that Zerodha’s founder called “scary” last month.
Before the history, the arithmetic. Put in your own numbers.
What a move against you costs
The share of capital lost is leverage times the move: 5x × 2% = 10%. Brokerage, STT and other charges come on top.
At the default settings, a 2% move on a 5x position costs a tenth of your capital. Switch to 20x, which Business Standard reported was common for intraday stock trades before the rules changed, and the same 2% takes 40%. A 5% move at 20x wipes out the account and leaves a bill. That gap is what the peak margin rule was written to close.
Four random checks a day
Until December 2020, exchanges looked at a broker’s margin books once, at the close. A trade opened at 10am and squared off at 2:30pm never showed up, so brokers could extend whatever intraday leverage they liked.
SEBI’s circular of 20 July 2020 added checks the broker cannot predict. Clearing corporations take “minimum 4 snapshots” of each client’s margin requirement during the day, at random moments inside pre-set windows, and the highest reading becomes that client’s peak margin.
- 19:48No open position: ₹0 required
- 211:22Catches the trade: ₹1,00,000 margin required
- 313:05Catches the trade: ₹1,00,000 margin required
- 415:12No open position: ₹0 required
Peak margin for the day is the highest snapshot: ₹1,00,000 for a ₹5 lakh position at the 20% minimum. Under the old end-of-day check, the only reading that counted was at 15:30, and it saw nothing.
Illustration. Real snapshot times are random, change every day, and fall within windows set by each clearing corporation.
For shares, the minimum margin is VaR plus extreme loss margin, with a floor of 20% of the trade value. A 20% floor is a 5x ceiling. It is a ceiling, not an entitlement: a volatile stock whose VaR plus ELM is 35% allows under 3x. And because the floor is set by the exchange, the ceiling is the same at every broker, which is why the “highest intraday margin” adverts that filled trading apps before 2020 have disappeared.
Six years of amendments, in order
Most explainers stop at July 2020. The framework has changed several times since, mostly in how the snapshots are priced for futures and options traders.
- 20 July 2020SEBI issues the peak margin frameworkAt least four random intraday snapshots per client, per segment. Brokers must show they held the peak.
- 1 Dec 2020 to Sept 2021Phased in over nine months25% of peak margin from December 2020, then 50% and 75% at three-month intervals, then 100% from September 2021.
- 16 Dec 2021Extra snapshots for commodity derivatives
- 10 May 2022 (in force 1 Aug 2022)Snapshots priced at the start of the dayMargins for intraday snapshots in derivatives use fixed beginning-of-day parameters, so a mid-session volatility spike no longer creates a shortfall nobody caused.
- 1 Feb 2023End-of-day check moved to the same basisClient margin at the close is also calculated on beginning-of-day parameters. Clearing corporations still update their own parameters through the day.
- Nov 2024 to Apr 2025SEBI’s index derivatives packageOne weekly expiry per exchange, larger contracts, option premium collected upfront, no calendar spread benefit on expiry day, extra margin on short options on expiry day.
- 5 Feb 2026Expiry-day rule extended to single stocksNo calendar spread margin benefit on expiry day for single stock derivatives either. In force three months after issue.
- Cited in 2026SEBI/HO/MRD/TPD/CIR/2026/034Several ranking pages say this circular raised F&O margins from 1 May 2026. None links to it, and we could not find it on sebi.gov.in.
Sources: SEBI circulars of 20 July 2020, 1 February 2023 (which records the 2021 and 2022 amendments) and 5 February 2026; SEBI's FY25–FY26 derivatives study for the 2024–25 package. The 1 August 2022 start date is as reported by Outlook Business.
The 2022 change followed what SEBI called representations from market participants, and was reported at the time as relief for brokers. The 2026 change is narrower. A trader holding two months of the same stock future used to get reduced margin for the offsetting pair on expiry day. Once one leg expires, the other is left open, and SEBI’s circular warns of “a risk of sudden increase in margin on the day following expiry”. Index derivatives already worked this way.
Where the borrowed money went instead
Options: a small premium on a large contract
An option buyer pays only the premium, and collecting it upfront was one of the measures in SEBI’s 2024–25 package. There is nothing for the peak margin rule to cap. But a ₹5,000 premium can control a contract worth lakhs, and a weekly option that expires the same day can lose all of its value in hours. It behaves like leverage, and it is where retail money went.
SEBI’s study of FY25 and FY26, published on 20 August 2026, found that 99.3% of individual derivatives traders traded options at least once and 93% traded nothing else. Just 6.6% touched futures. In FY26, 59% of index option turnover happened on the contract’s expiry day, down from 70% the year before.
Source: SEBI, Profitability of Individual Traders in the Equity Derivatives Segment (FY25–FY26), August 2026. The study notes the fall after November 2024 follows SEBI's measures but does not establish cause.
Turnover fell 17% after the November 2024 measures, recovered, and by the second half of FY26 was running 24% above where it started.
Margin loans: leverage that stays overnight
Under the margin trading facility, or MTF, a broker lends part of the price of shares the client holds for days or months, and charges interest. It is a disclosed, collateralised loan rather than a same-day position, so the intraday snapshots do not limit it.
That is the ₹1.43 lakh crore this article opened with. In his annual letter to clients on 26 August, Nithin Kamath said Zerodha’s own MTF book had reached about ₹9,000 crore, that interest on client leverage was 10% of revenue, and that a market fall could pull the firm down with its clients. Business Standard quoted his three-word summary: “MTF is scary!”
SEBI’s scorecard for retail traders
The regulator has now published two large studies of retail outcomes. Its July 2024 study of the cash market found that 71% of individual intraday traders lost money in FY23. The derivatives numbers are worse.
Sources: SEBI press release 13/2024 (cash intraday, FY23) and SEBI's FY25–FY26 derivatives study. Different segments and years, shown together for scale rather than as a trend.
Fewer people are trading. Active individual derivatives traders fell 18%, from 106.2 lakh in FY25 to 87.5 lakh in FY26, the first annual fall since FY16, and aggregate losses fell to ₹91,685 crore. The average loss per trader went the other way, from ₹1.13 lakh to ₹1.17 lakh. The smaller traders left; the ones who stayed traded harder.
Under-30s were 43% of individual derivatives traders in FY26, up from 31% in FY22, and 89% of them lost money. About 35% of traders held no shares or equity funds at all. Transaction costs stayed near ₹25,000 crore in both years even as activity fell, and STT paid by individuals rose 35% to ₹6,645 crore. The 2024 cash-market study adds one more figure that applies to any frequent trader: loss-makers spent a further 57% of their trading losses on costs.
Caught short: what the exchange charges
When a snapshot finds a client short of margin, the exchange penalises the broker. The rate depends on the size of the shortfall and on how long it lasts. Try a shortfall that runs for more than three days.
Penalty on a margin shortfall
- 1 day at 1%₹2,000
- Total₹2,000
Our model of the rules as described by Zerodha (0.5% below ₹1 lakh, 1% above) and NSE Clearing (5% a day beyond the third consecutive day). A separate 5% rule applies past the fifth shortfall day in a month, and a shortfall caused by a Nifty 50 move of 3% or more is not penalised unless it continues to T+2.
Whether you end up paying depends on the kind of shortfall. Zerodha said in 2022 that brokers cannot pass on penalties for failing to collect upfront margin, since collecting it is their job, and that it had stopped doing so from August 2022. A shortfall that appears later, because a position moved against you, can be charged to you. If a penalty line shows up in your contract note or ledger, ask your broker which kind it is.
The number that decides what SEBI does next
The peak margin rule did its job. Intraday leverage on shares is capped, the cap is the same everywhere, and exchanges check it at moments no broker can predict. What it could not do was limit leverage in products it was never written for.
Two figures will shape what comes next. If index option turnover keeps climbing past its pre-November 2024 level while the average loss per trader keeps rising, SEBI’s own numbers make the case for another round of derivatives measures. And margin lending growing 53% a year, flagged as a risk by the founder of India’s second-largest broker, is the kind of figure regulators tend to return to. For anyone trading in the meantime, the calculator at the top of this page gives the answer that matters most: leverage times the move, before charges.
