How-to Penalty Audit

How to verify penalty passed to exchange

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To verify a margin penalty was passed to the exchange (not retained by the broker):

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with Zerodha.

Step-by-step procedure

Four steps per the procedure infobox.

Why verification matters

By SEBI mandate:

  • Brokers pass shortfall penalties to the exchange / SEBI directly.
  • Brokers cannot retain penalty income.
  • The penalty appears in the broker’s ledger but is a pass-through.

If a broker were to retain penalty income, it would be a SEBI violation.

Reconciliation steps

  1. Console ledger for the penalty entry.
  2. Daily margin / penalty reports from the broker.
  3. Exchange-side daily margin report (in some cases visible).
  4. Annual statements for cumulative penalty.

If you suspect retention or incorrect calculation:

  1. Submit a Console ticket.
  2. If unresolved, escalate to SCORES .

See also

External references

References

  1. SEBI, Broker pass-through of penalties, sebi.gov.in.
  2. Zerodha, Ledger and penalty entries, console.zerodha.com.

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WebNotes Editorial Team

The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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Conflicts of interest
WebNotes is independent. No relationship with any broker, registrar or bank named in this article.