Hi,
I have noticed that dhan has higher haircut for pledged stocks. For example, in zerodha and groww zerodha liquicase has 6% haircut but on dhan its 8%. Another example is wipro where zerodha has 11.38% haircut while dhan has 12.05%. Another is Jubilant Foodworks in groww haircut is 13% but in dhan its 20%.
I wonder how this haircut is calculated and why dhan has higher haircuts. I can understand for equity stocks there can be difference. But for safer instruments like liquid etf 6% and 8% haircut can make a big difference when working with bigger capital when regulatory requirement demands for 50% in cash equivalent securities.
I hope to understand more about this.
Thank you
Hi @Tanmay_Behera Tanmay,
Valid question… stock trading platforms work within the comforts that are provided by the exchanges when it comes to risks, margins and leverages. This means the maximum thresholds are defined by the exchanges, and the brokers will have to operate within these limits.
Now at Stock Trading platform levels, many of these are defined in the Risk Management Policy that is available to the traders. In case of Dhan the same is here: Risk Management Policy | Dhan
For every script that’s here, the Risk team defines the limits based on their internal assessment of respective script… the most common questions they ask are usually on exposure to a particular scrip, liquidity available at stock level, their comfort based on the movements on market ~ stable script v/s wild movements, addition to exchange tracking like trade-to-trade, asm, gsm, other surveillance measures, circuit limits, etc etc. These are specific to the perspective the teams, exchange permissions and market performance.