Can equity holdings be used as collateral margin for commodity trading instead of cash pay in?

General
2

Yes, you could pledge your equity shares and raise margins to trade in the Commodity segment. However you are required to keep cash for the sake of ‘mark to market’.

However it would depend on your broker whether or not he’s providing such service.

2 Likes
3

If I used my stock portfolio holdings as colateral and say utilize the extra margin received then is there any interest that Zerodha will charge me for using the extra margin?

4

Hi Nithin, does Zerodha provide this facility?

5

Just noticed Venu that you are the compliance office of Zerodha…so, does Zerodha provide this service?

6

For now we aren’t. Will keep you posted when we start accepting equities as collateral for trading in Commodities.

7

If their is 100 qty holding in NSE and 50 qty holding in BSE then at all exchange all segments and all products level how much maximum collateral benefits will that user get ?

150 or 100

1 Like
8

@VM1 When can we expect this feature from Zerodha? Having collateral margin but not being able to trade in commodity segment is miss

9

Any update on this?

10

We’re looking at merging our Equity & Commodity business. Once that’s done, the funds are fungible and same margins can be used across trading Equities & Commodities. That’s still sometime away though.

2 Likes
11

Just out of curiosity, why do most brokers have separate companies for equity and commodities? Is it because of some regulatory benefit or something else?
@VenuMadhav

2 Likes
12

Much earlier, the Equity markets were regulated by SEBI and Commodity markets by Forwards Market Commission (FMC). By design, every broker had to obtain membership separately and operate it as 2 different business units.

FMC was then merged with SEBI and SEBI laid down guidelines for unification of the Equity and Commodity businesses. This change is a big because we’ve to merge two different companies, processes have to undergo changes, system related changes and since there’s dependency on RMS vendor, it’s taking an extended period of time.

3 Likes
13

@VenuMadhav , is there an approximate timeline for the merger ? Is this something we can expect in the next few months or could it take longer?

14

This is going to take longer than a few months. Will keep you updated.

1 Like
15

Any update on this? Its 2022 now

1 Like
16

Any update here?

17

This is unlikely to happen in the near future.

18

Anyother brokers providing this facility ?

20

@VenuMadhav
It’s very necessary and common feature. Every broker is providing this. But why is this not in zerodha. Very surprised. From the last many years, you are committing to implement this in very soon. So please let us know this thing will be implemented or not. Collateral trading for MCX.

We have to trade on other platform presently for mcx which provides pledging for MCX.

21

Can you tell me which of the brokers provide this facility(i.e pledging shares and trade both equity fno and commodity fno). Actually i don’t know any.