I trade in F&O and have pledged stocks to get margin. I have also pledges liquid bees. Is there a simple and efficient way to find out if I am violating the 50% cash margin rule at the end of the day? So lets assume:
In this case, your (collateral margin + free cash) = 1.6 lacs, so you will not be able to take an overnight F&O position of 2 lacs.
Allow me to change the values as below to explain:
Available collateral margin = Rs. 1.5lacs
(btw, collateral margin is what you receive when you pledge shares after an applicable haircut).
Available free cash = Rs. 50k.
Since (collateral margin + free cash) = 2 lacs, you can take an overnight F&O position of 2 lacs. At the end of the day, 1 lac is taken from the collateral margin and the other 1 lac is taken from free cash. But since you have only 50k free cash, 1.5 lacs is taken from collateral margin and only 50k is taken from free cash. Now for the 50k shortfall in free cash, you’ll be charged an interest of 0.05% per day.
Divide your F&O margin amount by 2 and ensure one half of this is available in free cash to avoid violating the 50% cash margin rule.
Well, the point I was trying to make here was that there is a portion of Liquid Bees which is also pledged which is considered as cash as mentioned by @nithin in the post here:
So I would consider that the total cash I have here is: 50K cash + Cash component of Liquid Bees after haircut = approx = 50K +45K (assuming 10% haircut) = 95K. This still indicates that I am short 5K but I want to confirm that the arithmetic here is correct.
Since liquid bees is equivalent to cash, you can sum it up to arrive at the net cash component.
Divide the total margin blocked by 2 and see if you’re having sufficient cash margin to the tune of this 1/2 margin blocked. If yes, then there’s nothing for you to worry, if it isn’t, then more than 50% of your margins are being funded by non cash component which is when interest gets charged.