For trading in F&O there is 50% cash and 50% collateral rule . Is it mandatory to have 50% margin as collateral ? Can’t I just trade with 100% margin which I got from cash (transferred from bank ) ? Or is it mandatory to invest in other instruments and pledge it ?
No it is not mandatory to have 50% margin in collateral, you can use 100% cash as well.
The requirement is for minimum 50% of the margin to come in form of cash or equivalent (you can use more than 50% cash as well), while 50% can come in form of collateral margin (you can use max 50% collateral margin for overnight positions, this can be less than 50% as well but shouldn’t be more than 50%, if you use excessive collateral margin there will be interest charged at 0.05% per day).
@ShubhS9 Can you please give me clarity on what comes under cash and what comes under collateral margin . Liquid bees dosen’t come under collateral and guilt funds dosen’t come under collateral . It is a bit confusing . So can you please clarify what instruments come under collateral and what instruments come under cash .( not just liquid bees and guilt funds , all the instruments like MF , stocks , etc ,.) Thankyou
You can check this list, all securitues which come under Cash Component are listed seperately while those in Non-Cash Component are listed separately.
For MIS , can we use all the collateral available . Basically like without any cash ?
For MIS you can, there is no 50-50 Cash - Collateral restriction for Intraday, this is only for overnight positions.
@ShubhS9 Why Bharath Bond is not considered as Cash component. Please explain. Bharath bond is backed by Govt they why not considered under Cash component
Any update on my above query
This likely happens because Bharat Bond ETF invests in CPSEs/CPSUs/CPFIs bonds and not G-Secs/T-bills alone. If you check the latest clearing corporation circular about the list of securities that have been approved for collateral, these CPSEs/CPSUs/CPFIs bonds fall in the non-cash category (Check Annexure 6 of the circular). As the bonds fall into the non-cash category, it is highly unlikely that the ETF which is a made up of these bonds would fall under cash component.
Around 6 months back, Motilal Oswal had launched an ETF called G5 that only invests in G-Secs. Due to that, it was added to the cash component list -
Can you give a link where we can see the Clearing Corporation’s Cash component/Non Cash Component Mutual Fund List ?
You should be able to access that list by searching for the circular named “Revised list of Approved Securities and Approved Banks” (Annexure 5 within this circular contains the Mutual Fund list) on the NSE website -
@Stonecold You can check here. This is Zerodha list of securities and it has cash and non cash components separately. In line 1038 of non cash components Mutual Fund section starts and from line 12 in cash components Mutual Funs section starts.
@Adityadd It appears @Stonecold wanted to check if Zerodha missed anything from the Clearing Corp list
50-50 cash collateral is at Broker level not at client level. We are being mislead here.