Intraday Margin Leverage
Intraday margin leverage refers to the amplified buying power a broker extends to traders for positions opened and closed within the same trading session, historically available at multiples of 5x to 20x in India before SEBI's peak margin regime reduced it to near-delivery levels.
Intraday margin leverage allows a trader to control a notional position value significantly larger than the actual capital deployed. Prior to SEBI's comprehensive peak margin circulars, Indian discount brokers competed aggressively on leverage: Zerodha MIS offered 5x on equities, while some brokers extended 10x to 20x leverage on liquid large-cap stocks, and even higher multiples on futures and options through Bracket Order (BO) and Cover Order (CO) products.
The mechanics worked through the MIS (Margin Intraday Square-off) product type. When a trader placed an MIS order, the broker computed the required margin as a fraction of the trade value — perhaps 20 percent for a 5x leverage product — and blocked only that fraction from the available balance. The remaining 80 percent was extended on credit by the broker, with the understanding that all MIS positions would be compulsorily squared off before the end of the session (typically between 3:20 PM and 3:25 PM for equity cash on NSE).
SEBI's peak margin circular, implemented in phased tranches between December 2020 and September 2021, fundamentally altered this landscape. The regulation required brokers to collect upfront margin equal to the exchange-mandated VaR (Value at Risk) plus ELM (Extreme Loss Margin) even for intraday positions. Because these margins for large-cap equities range from 10 to 25 percent of trade value, the effective intraday leverage was compressed to 4x to 10x for most stocks. For mid-cap and small-cap equities with higher VaR charges, leverage fell even further.
Bracket Orders and Cover Orders — which allowed higher leverage by combining mandatory stop-losses — were suspended by most brokers following SEBI's circular, as the embedded stop-loss could no longer be relied upon to limit intraday risk to the fractional margin collected. Zerodha and Upstox formally discontinued BO and CO products after the regulation took effect.
The practical impact on retail traders was significant. A trader who previously controlled Rs 10 lakh of Reliance stock with Rs 50,000 margin under a 20x MIS product now requires Rs 1.5 to 2.5 lakh for the same position. This reduced leverage has decreased the frequency and velocity of intraday trading in the equity cash segment, though F&O volumes remain comparatively unaffected because futures margin requirements are structurally unchanged by the peak margin rule.