50:50 cash and collateral requirement query

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.

Hi @ShubhS9,
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.

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@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

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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 -

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