Difference between cash component and non-cash component

Zerodha
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What is difference between cash component and non-cash component approved list of Securities at Zerodha for pledge. @ShubhS9 @siva

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The major difference between the two is, the margin recieved from pledging Cash Component securitues can be used instead of cash to fund your overnight F&O positions, as you must know, for overnight F&O positions, exchange needs minimum 50% margins to come in form of cash and remaining 50% can come from collateral margin (non-cash component).

Other than this, there is not much difference between Cash and Non-Cash Component.

1 Like
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Thanks Shubh.

That means - say i need 1 lakh margin for overnight F&O position.
I can raise 50% (50K Rs.) from pledging of Non-Cash Component securities and 50% (50K Rs.) from Cash Component securities. No need of cash margin (need only cash for P/L). is my understanding correct?

Can i raise 100% (1L) from pledging Cash Component securities? say HDFC money market fund direct growth.

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Yes, you can do this. To settle any loss and charges you will need cash in your account, this cannot be done using margin received from pledged securities.

Yes, you can do this as well.

Also, do keep in mind, the collateral margin can only be used for Intraday Equity, Trading Futures, and Shorting Options. You cannot use this for taking delivery of stocks or to buy Options, for this you will need cash in your account.

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5

You mean we can take option short position overnight. Right?

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Yes.

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Thanks Shubh. Appreciate your prompt response.

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Why is LIC MF G-Sec ETF (security name - LICNETFGSC) part of non-cash component in pledging whereas Nippon India Long term gilt ETF (security name - NETFGILT) is part of cash component even though both are gilt funds?

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I have received msg from my broker regarding allocation of cash component.
What it means

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This email and SMS are sent to inform you of the segment-wise fund allocation.

The Clearing Corporation (CC) sends emails and SMS to comply with the SEBI guidelines. As per the regulations, stockbrokers are required to allocate client funds segment-wise with the CC. This means that the balance maintained with Zerodha will be segregated and allocated segment-wise depending on the trades and margin utilization. You do not have to take any action because the email and SMS are sent only to inform you of the segment-wise allocation. You can learn more about this here: Why was an email and SMS sent by the clearing corporation informing about the allocation of funds?