PLATFORM, BROKER & EXCHANGE RULEBOOK • ZERO SURPRISES

Trading, Settlement & Financial Rules.

Every algorithmic trader on NSE/BSE must understand the exact operational rules enforced by MudraVault, your broker's Risk Management System (Zerodha Kite / Dhan), and SEBI/Clearing Corporations.

MudraVault Platform Execution & Capital Allocation Rules

Built-in algorithmic guardrails that govern every automated order

Rule 1.1 • Capital Ceiling HARD CAP

Strict Deployable Capital Formula

The bot never trades your entire broker balance blindly. At the start of every scan cycle, deployable capital is strictly bounded by:

Deployable = Min(Broker Free Cash, User Max Capital) − Safe Money Vault

Rule 1.2 • One-Way Ratchet PROFIT LOCK

Safe Money Reserve Ratchet Rule

Whenever a trade closes in positive Net Realized Profit, your configured profit-sweep percentage is added to your Safe Money Reserve Floor. This reserve acts as a one-way ratchet: it can only increase as you win, and the bot is blocked from dipping into locked vault capital even after a losing trade.

Rule 1.3 • Liquidity Filter ANTI-SLIPPAGE

Pre-Trade Bid-Ask Spread Sanity Gate

To prevent entering illiquid stocks or getting trapped by freak stub quotes, MudraVault inspects live Level-1 market depth prior to every entry. Any equity symbol with a bid-ask spread wider than 2.0% (or 5.0% on options) is automatically skipped.

Rule 1.4 • Quarantine Gate 60-MIN COOLDOWN

Broker RMS Rejection Quarantine Rule

If your broker's Risk Management System (RMS) rejects an order for any reason (insufficient margin, surveillance stage `ASM/GSM/T2T`, or OI strike limits), MudraVault immediately quarantines that symbol for 60 minutes so your account never triggers rapid retry loops.

Broker & Exchange Order Execution Rules (Zerodha Kite & Dhan)

Critical NSE/BSE & broker order-matching rules every trader must respect

Rule Name	Official Broker / Exchange Rule	Critical Edge Case / Risk Trap	Best-Practice Protocol
Intraday `MIS` Auto Square-Off Cutoff	Open intraday (`MIS` / `CO`) equity positions are automatically squared off by broker RMS between 3:20 PM and 3:25 PM IST (and 3:12 PM IST for Closing Auction Session stocks).	Letting broker RMS auto-square-off your trade incurs a flat penalty of ₹50 + 18% GST (`₹59`) per executed order. Furthermore, if an `MIS` short-sell locks in an Upper Circuit with zero sellers, it defaults into a crippling Exchange Short-Delivery Auction (`up to 20%+` penalty).	Close intraday positions or convert `MIS -> CNC/NRML` (requires 100% margin) before 3:10 PM IST. Never short illiquid low-float stocks in `MIS`.
Options `SL-M` Ban & `SL-L` LPP Corridor	NSE/BSE permanently discontinued Stop-Loss Market (`SL-M`) orders on Options. Traders must use Stop-Loss Limit (`SL-L`) orders inside the exchange's Limit Price Protection (`LPP`) range.	If your `Limit` is only `₹0.05` away from your `Trigger`, fast gamma spikes skip your stop-loss completely. If your `Limit` is too far (`> 10%–20%`), NSE rejects the order on placement.	Use a calibrated `2% to 4%` Trigger-to-Limit cushion on `SL-L` orders so the limit acts as an immediate marketable fill on trigger.
GTT Gap-Down Execution Rule	Good-Till-Triggered (`GTT`) orders fire a resting Limit Order into the exchange book when Last Traded Price (`LTP`) breaches the Trigger Price.	If a stock closes at ₹500, you set `GTT Trigger = ₹480, Limit = ₹478`, and the stock opens at ₹440 (Gap-Down) at 9:15 AM, your ₹478 Sell Limit order sits unfilled while the stock crashes further.	Always set a 3%–5% spread between Trigger and Limit on protective GTT stop-losses, AND activate Digital DDPI so GTT sell orders don't stall waiting for daily CDSL TPIN + OTP.
Freeze Quantity, Slicing & Disclosed Qty	F&O orders exceeding the exchange Freeze Limit are split via Auto-Slicing or sequential Iceberg Orders (Limit only). Equities support native Disclosed Quantity (min 10%).	Every Auto-Sliced child order and every Iceberg leg is billed as a separate executed order (`₹20 × N slices`).	When trading large Equity (`CNC`/`MIS`) blocks, use Disclosed Quantity (10%) (billed as 1 single ₹20 order) instead of multi-leg Icebergs.
Pre-Market (`9:00–9:07 AM`) & `AMO` Rule	Equity Pre-Open accepts orders strictly from 9:00:00 AM to 9:06:59 AM IST. Between 9:07 AM and 9:15 AM, the book is locked for Equilibrium Price discovery.	Orders placed between 9:07 AM and 9:14:59 AM are automatically rejected with an `Outside Trading Hours` error.	Queue After-Market Orders (`AMO`) before 8:58 AM, or place live orders from 9:15:00 AM onward.
15% Broker OI Strike Cap (`Nudge` Rule)	SEBI caps any single broker at 15% of Market-Wide OI or ₹500 Cr per F&O contract. Brokers block naked overnight (`NRML`) buying of far-OTM index options when hit.	Attempting to buy restricted far-OTM strikes in `NRML` triggers a Nudge rejection, whereas `MIS` (Intraday) and Option Writing remain open.	When building hedged spreads, always execute the Short leg first (or use a Basket) to unlock hedged OTM buying, or trade intraday via `MIS`.

Profit Realization, Loss Penalties & Settlement Rules (`T+1`)

How profits, BTST credits, MTM losses, and expiry settlements work under SEBI rules

Profit & Credit Settlement Rules

1. The `T+1` Realized Profit Rule: When you book an Intraday (`MIS`) or F&O profit today (`Day T`), your original principal margin unlocks immediately for new trades, but 100% of the realized profit is locked until `T+1` morning (for trading) and `T+1` evening (for bank withdrawal).
2. The Asymmetric Unrealized `MTM` Rule: Unrealized losses on open positions are deducted from your Available Margin immediately in real time, whereas unrealized floating profits add ₹0 to your Available Margin until closed and settled.
3. The `0%` BTST (`T1` Holding) Sell Credit Rule: If you buy a delivery stock on Day 1 (`T`) and sell it on Day 2 (`T+1` / BTST), NSE/SEBI rules mandate that 0% of the sale proceeds are available for trading on Day 2 (because Early Pay-In cannot be run on unsettled `T1` shares). Funds unlock on Day 3.
4. The `80/20` Settled Delivery (`CNC`) Sell Rule: Selling settled Demat shares gives 80% instant credit (and 100% credit once CDSL Early Pay-In [`EPI`] completes via DDPI).
5. The `ITM` Option Expiry `0.125%` Exercise STT Rule: Never let a slightly In-The-Money (`ITM`) long option auto-expire at 3:30 PM—auto-exercise charges `0.125%` STT on Intrinsic Value plus Exercise Brokerage. Always square off manually before 3:25 PM!

Loss, Margin & Physical Delivery Rules

1. Stock F&O Physical Settlement Trap: Unlike Index Options (cash-settled), all Individual Stock Futures & Options are Physically Settled. Holding an ITM Stock Option at 3:30 PM on Expiry Day forces mandatory ₹5L–₹10L physical stock delivery or a catastrophic 20%+ Short-Delivery Auction fine.
2. The `50:50` Cash-Collateral F&O Rule: Overnight F&O margins require at least 50% Cash / Cash-Equivalents (`LIQUIDCASE`, `LIQUIDBEES`, G-Secs) and max 50% pledged equity collateral. Any cash deficit below 50% incurs Delayed Payment Charges (`DPC`) of `0.035%/day + 18% GST` (`0.05%/day` or `18.25% p.a.` on negative cash balances).
3. Multi-Leg Spread Exit Rule (Peak Margin): Always enter spreads Buy Leg First → Sell Leg Second, and exit Close Short Leg First → Close Long Leg Second. Closing the protective bought option first spikes margin 4x and triggers a 0.5% to 5% Peak Margin Shortfall Penalty.
4. `MTF` (`0.04%/day`) & `80%` Loss Liquidation Rule: Broker Margin Trading Facility (`MTF`) charges `0.04%/day` (`14.6% p.a.`) interest and automatically liquidates your position if losses reach 80% of the broker-funded amount.
5. SEBI Quarterly Running Account Payout: Once every 90 days (or 30 days), brokers must sweep unutilized free cash back to your Primary Bank Account. Park idle margin in `LIQUIDCASE` or use Secondary Market `UPI Block (ASBA)` to avoid quarterly sweep disruptions.

FIFO Accounting, BSDA AMC & Income Tax (`ITR-3`) Loss Set-Off Rules

How CDSL and the Income Tax Department classify your trades

Strict `FIFO` Demat Rule

When selling `CNC` delivery shares, CDSL always sells your oldest purchase tranche first (`First-In, First-Out`). Note: Intraday (`MIS`) trades and same-day `CNC` buy+sell round-trips are netted intraday and never touch your long-term Demat FIFO queue. Therefore, for tax harvesting, never sell and re-buy `CNC` on the same day—always sell on Day `T` and buy back on Day `T+1`.

`BSDA` Single-Demat AMC Rule

Under SEBI Basic Services Demat Account (`BSDA`) rules, holdings up to ₹4 Lakhs pay ₹0 AMC (₹4L–₹10L pays ₹100+GST/yr), only if you hold a single Demat account across your PAN. Opening a second Demat account on another app disqualifies BSDA and triggers ₹300+GST/yr (`₹88.50/quarter`) AMC.

`₹10 Crore` Section 44AB Audit Rule

F&O Tax Turnover is calculated via the ICAI formula (Sum of Absolute Profits + Absolute Losses, not notional contract value). Because 100% of broker trades are digital, a Section 44AB CA Tax Audit is only mandatory above ₹10 Crore turnover (unless triggered by opting out of Section 44AD). File `ITR-3` before July 31st to carry forward losses.

Trading Segment	Income Tax Classification	Same-Year Loss Set-Off Allowed Against	Carry-Forward Horizon
Equity Intraday (`MIS`)	Speculative Business Income (Sec 73)	ONLY Speculative Intraday Profit (Cannot offset F&O, Capital Gains, Salary, or Rent)	4 Assessment Years
Futures & Options (`F&O`)	Non-Speculative Business Income (Sec 72)	Any Business Profit (incl. MIS), House Property, Capital Gains (`STCG/LTCG`), & Other Sources (Cannot offset Salary)	8 Assessment Years
Short-Term Delivery (`< 12M`)	Short-Term Capital Gain/Loss (`STCG` 20%)	Both `STCG` and `LTCG` (Cannot offset Business/Salary income)	8 Assessment Years
Long-Term Delivery (`> 12M`)	Long-Term Capital Gain/Loss (`LTCG` 12.5% > ₹1.25L)	ONLY `LTCG` (Cannot offset `STCG` or Business/Salary income)	8 Assessment Years

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