Update: Trading Limits against Credit for Sale (CFS) and Sell restrictions effective 8 May 2023

Update:

In accordance with the latest regulatory updates on Credit for Sale, we have introduced modifications to our Risk Policy. As you might be aware that Credit For Sale benefit can now only be provided after doing the early pay-in of securities

To ensure a seamless transition, these changes will be implemented gradually over time.

Case Selling of Stock Current Revised Phase
(a) From Free Holding 80% 80% Phase 2
(b) CUSA 80% 0% Phase 2
(c) BTST 80% 0% Phase 2
(d) Margin Pledge 80% 80% or (100% less Haircut value whichever is minimum) Phase 1

Consider the below examples for better understanding:
(a) If you sell stock from Free Holding - You will get flat 80% of the CFS benefit
(b) If CUSA stock is sold / You sell stock from CUSA - You will get no CFS benefit
(c) If you buy the stock and sell on the next day (BTST) - You will get no CFS benefit
(d) If you sell stock which is Pledged for Margin - You will get a minimum of 80% or (100% less the haircut value of the stock).

Stock Name Haircut CFS Benefit
Stock A 10% Min (80%, 90%) = 80%
Stock B 15% Min (80%, 85%) = 80%
Stock C 35% Min (80%, 65%) = 65%

We will be rolling out Phase 1 (Case: d) from 10th August, 2023 and we will update the date of implementation of Phase 2 (Cases: a, b, and c).

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Update: Phase 2 will be rolled out from 18th September 2023.

(a) If you sell stock from Free Holding - You will get flat 80% of the CFS benefit
(b) If CUSA stock is sold / You sell stock from CUSA - You will get no CFS benefit
(c) If you buy the stock and sell on the next day (BTST) - You will get no CFS benefit

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@Rajesh @PravinJ @Poornima Is buyback of holdings now possible? From the main post, one gets the idea that this is a regulatory change but if it is a black and white regulatory change then it applies to all stock brokers in India and no one would be allowing buyback of sold holdings but that is clearly not the case as buyback is allowed at the largest stock broker and no one there is running into any margin shortages. Converting position to intraday and then buying back may be a temporary workaround but not a solution as it’s not feasible, not scalable and not convenient.

So what is the real reason behind Dhan not allowing to buy back sold holdings? Even in the linked NSE circular, no where does the circular says that sold securities cannot be bought the same day.

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@PravinJ @iamshrimohan I was not able to buy back the holdings which I sold today. I wonder why I am able to do the same in Zerodha but not in Dhan. How can the regulatory policies differ for brokers?

We refer to the circular above and make changes to the processes, it clearly states that when Securities are sold from holdings, we can pass 80% limit after early pay-in of those sold shares. Can’t comment on what other brokers do. Alternative for doing buyback is to convert the order to Intraday, this solves for the same.

Yes, I’m aware of the 80% limit. Zerodha also apply the same rule. I had extra funds in the Dhan account. So, I should be able to buy back 100% in the same category. Anyways, I found the solution of converting to intraday. It’'s not a problem but adds a bit of friction / one extra step to the process.

@PravinJ Any update? Why am I not able to buy back the shares I sold in delivery from my portfolio even when I have 200% extra funds? Why I need to use intra day order type?

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Dhan, this is deal breaker for swing traders. Zerodha, Mstock, etc. brokers allow delivery square off whereas dhan is using regulatory excuse to deny its customer the intraday profit then can get after selling their holdings.

That is k. But if clients have sufficient fund they should be allowed to buy back what they sold without going for intraday product. There is no regulatory hurdle in allowing the client to buy back what was sold the same day if he has sufficient funds left in the account.

What’s more laughable is that Dhan is losing brokerage and they are not aware of it.

Dhan team, how many delivery trade do you block every month because of this policy and lose brokerage, could you calculate loss of revenue caused by this?

Just multiply no. of delivery trades which end up in price fall with Rs. 20/- missing brokerage.

Stupid policy is being defended as smart move. You are losing brokerage because of this. period.

There is no brokerage for delivery trades with Dhan.

Hi Sir,

Strange that other brokers allow this.

will the current workaround in Dhan OK to use or it create any issues

Delivery trade sell —> Intraday buy----> convert into delivery

Thanks