What is peak margin?

Peak margin is the rule under which clearing corporations check your margin during the trading day, not just at the end of it. They take snapshots of every trader's positions at points through the session, and the required margin must be fully covered at each snapshot, including for positions you open and close within the same day.

What problem does peak margin solve?

Before this framework, margin was effectively checked only on end-of-day positions. A trader could take a huge position at 10 am, square it off by 3 pm, and end the day flat. The end-of-day report would show almost nothing, even though enormous risk had existed at noon.

That gap allowed very high intraday leverage: some brokers funded positions many times a client's balance, betting everything would be squared off in time. When a big move hit mid-day, losses could exceed what the trader had deposited. Peak margin closed the gap by making the largest margin requirement during the day (the "peak") the number that must be covered.

How do the snapshots work?

Through the session, the clearing corporation captures snapshots of your open positions and computes the margin each snapshot needs. The highest of those figures is your peak margin obligation for the day, and your broker must have collected at least that much from you upfront.

Trace Rahul's day as an illustration:

Rahul ends the day with no position, but a snapshot near 12:30 pm catches the ₹75,000 requirement. That is his peak, and it must have been covered by real funds in his account at that time. "I closed it before 3:30" is no defence.

Is this why intraday leverage is capped?

Yes. Since full exchange margin must be present at every snapshot, no broker (Rupeezy or anyone else) can lawfully offer intraday positions on less than the exchange-prescribed minimum margin. The extreme intraday leverage of earlier years is gone industry-wide; whatever intraday margin benefit exists today operates within this cap. How intraday trading works in practice is covered in What is intraday trading?, and the broader risk story in What is leverage, and why is it risky?

Do I have to do anything about peak margin?

No, and this is the part worth knowing. Peak margin compliance is your broker's obligation, not yours. The rule governs whether the broker collected enough margin from you upfront, so if a snapshot finds a shortfall against it, the resulting penalty is levied on the broker, not on you.

Your broker also cannot pass that penalty on to you. In practice you will never see it, be billed for it, or find it on a statement. It is settled between the broker and the exchange, and the systems that prevent it are built on the broker's side.

So there is no peak-margin action for you to take: no snapshot to plan around, no separate buffer to maintain for it. What peak margin does affect is the leverage available to you in the first place, which is the section above, the cap exists because of this rule.

This is different from a margin shortfall on your own open positions. Where your balance falls below what your positions require, through MTM losses or a margin revision. That one does reach you, and it's covered in What is a margin shortfall, and what is the penalty?

Things to keep in mind

• This is background, not a to-do. Peak margin is a rule about what your broker must collect; there is no snapshot for you to manage.
• Its real effect on you is the cap on intraday leverage. The reason no broker can offer the outsized intraday multiples of years past.
• Margin is required all day long, not just at close, so squaring off early doesn't undo a mid-day peak. Adding to a position raises that peak immediately.
• What does land on you is a margin shortfall on your own positions. A different rule, with a penalty you do pay.

Read next

What is a margin shortfall, and what is the penalty? — The margin rule that does reach your account, and what it costs when it does.