MIS product code on Zerodha

MIS (Margin Intraday Squareoff) is a product code on Kite, Zerodha’s trading platform, that designates an order as an intraday trade. Positions opened under MIS must be closed within the same trading session. If a MIS position remains open at approximately 3:20 PM, Zerodha automatically squares it off (closes it) at the prevailing market price. In exchange for the intraday restriction, Zerodha offers additional leverage over the CNC equity delivery product.

MIS is available for equity (cash segment), equity derivatives (F&O), currency derivatives, and commodity derivatives. It is the primary product code for active intraday traders on Kite.

What MIS means in practice

An MIS trade opens and closes within the same day. There is no overnight risk because:

1. All MIS positions are compulsorily squared off before the end of session.
2. No delivery of shares occurs, the net profit or loss is settled in cash.
3. The trader’s demat account is not involved in MIS equity trades.

The net P&L from MIS trades is credited or debited to the trading account at the end of the day.

MIS leverage

Zerodha offers additional margin for MIS trades beyond the exchange’s standard SPAN (Standard Portfolio Analysis of Risk) and VAR (Value at Risk) margins. The additional MIS leverage varies by segment and instrument:

• Equity intraday (NSE/BSE): Zerodha historically offered up to 5x leverage for equity MIS, though SEBI’s peak margin circular (2020–2021) and subsequent regulations have significantly reduced the effective leverage available for intraday equity.
• F&O (NRML vs MIS): Zerodha offers a discount on F&O SPAN + exposure margins for MIS. As of 2024, MIS F&O margin is approximately 50–80% of the full NRML margin, depending on the instrument.
• Currency derivatives: Similar MIS margin discounts apply.

SEBI’s margin framework has progressively tightened intraday leverage since 2020. Zerodha’s MIS margin multipliers are subject to revision and traders should check the current margin calculator at zerodha.com/margin-calculator.

Auto-square-off timing

The auto-square-off for MIS positions occurs at approximately 3:20 PM for NSE and BSE equity and F&O. This is 10 minutes before the equity market close at 3:30 PM.

For other segments:

• Currency derivatives (NSE/BSE): 4:45 PM (approximately)
• Commodity derivatives (MCX): Varies by commodity; generally before the commodity’s settlement period.

The auto-square-off is executed by Zerodha’s system at market price. This means MIS positions closed via auto-square-off receive the prevailing market order fill price, which may include slippage during a volatile close.

Zerodha charges an auto-square-off penalty of Rs 50 per position per segment per day for positions that are squared off by the system rather than manually closed by the trader. This applies regardless of whether the position is profitable or loss-making.

Short selling under MIS

MIS permits short selling in the equity cash segment. A trader can sell shares they do not hold under MIS, with the expectation of buying them back before the auto-square-off. This is the standard mechanism for intraday short selling in India.

Equity short selling is not permitted under CNC (delivery). Short positions in F&O can use either MIS or NRML.

Product code interaction with order types

MIS works with all Kite order types:

• Market order with MIS: Immediate intraday entry/exit at market price.
• Limit order with MIS: Precise price intraday entry.
• SL and SL-M with MIS: Stop-loss management for intraday positions.
• Cover order (CO): CO uses MIS-equivalent margin with compulsory stop-loss.

GTT orders can be placed with MIS, though this is unusual given that GTT is typically used for multi-session triggers while MIS positions close the same day.

MIS versus CNC and NRML

Converting MIS to CNC (position conversion)

Kite allows a trader to convert an open MIS equity position to CNC during the trading session, provided sufficient cash is available to fund the full delivery purchase. This is useful when an intraday trade moves in the trader’s favour and they decide to hold it overnight.

The conversion is done from the positions panel. Kite blocks the additional funds required to upgrade from MIS margin to full CNC delivery. The converted position is then treated as a delivery trade and is not subject to auto-square-off.

Similarly, a CNC position can be converted to MIS to free up margin for the day, though this results in the position being squared off at 3:20 PM if not manually closed.

Margin call and position liquidation

If mark-to-market losses on MIS positions reduce the available margin below the required level during the session, Zerodha may initiate a margin call and liquidate MIS positions. This is separate from the 3:20 PM auto-square-off and can occur at any time during the session.

SEBI’s peak margin rules require brokers to monitor intraday positions multiple times per day and collect margins based on peak positions. Zerodha’s risk management system monitors MIS positions in real time.

Common mistakes and edge cases

Forgetting to close MIS before 3:20 PM. A trader who places a profitable MIS position and forgets to exit will be auto-squared by Zerodha’s system. While the profit is captured, the Rs 50 penalty is charged regardless.

Using MIS for an overnight strategy. Traders new to Kite sometimes select MIS assuming it offers “more margin” without realising the mandatory same-day close. An overnight strategy requires CNC (equity) or NRML (F&O).

MIS short in a delivery account. MIS short positions in equity are opened and closed the same day without involving the demat account. Some traders confuse this with actual short selling of delivery shares (which is not permitted under Indian securities law for retail investors on an overnight basis in the cash segment).

Auto-square-off during volatile close. On volatile days (results season, budget, elections), the 3:20 PM window sees heavy auto-square-off activity across all MIS positions system-wide. This can result in poor fill prices for auto-squared positions due to elevated market impact.

Penalty accumulation. A trader who consistently leaves MIS positions to auto-square-off will accumulate Rs 50 penalties daily. On 20 trading days in a month, this is Rs 1,000 in additional costs per position per segment.

Regulatory context

SEBI’s margin regulations govern the maximum leverage a broker can offer for intraday positions. SEBI’s circular on peak margin collection (SEBI/HO/MRD/DP/CIR/P/2020/175) fundamentally changed intraday margin norms from 2020 onwards, requiring collection based on the highest intraday position level rather than end-of-day positions. Zerodha’s MIS margin offering has been revised multiple times in response to these regulatory changes.

References

1. SEBI circular on peak margin framework, SEBI/HO/MRD/DP/CIR/P/2020/175.
2. Zerodha support article: “What is MIS?”, support.zerodha.com.
3. NSE circular on intraday margin norms, NSE/MEM/2020 series.
4. Zerodha margin calculator, zerodha.com/margin-calculator.
5. SEBI master circular on stock broker obligations, SEBI/HO/MRD/2023.