Supposing if I have Rs 9L (after haircut of 10%) as collateral margin which I have received from Zerodha by pledging the following:
5L received from cash component (liquid funds,etc)
1.2L from non cash component (equity mf, etc)
2.8 L from shares( non cash component)
Now…
Can I take positions freely with the entire 9L since more than half of it that is 5L, is a cash component?? (So logically 50%cash rule shouldn’t apply)
What will happen if, after I get the margin from the collateral and value at risk increases…for example now haircut for Bharat bond (or any other underlying) is 10% then tomorrow let’s say the vix surges and you guys decide to increase the haircut of the underlying to 20% then what will happen to my existing margin and my existing positions?
What will happen if I have MTM loss of 50k in options trading (NOT in futures)? This loss is not a booked loss, I am hoping to turn this loss into profit in a few days so what will happen on that particular day when there is a loss?
a) Zerodha will adjust it with my collateral? And if yes what would be the preference of liquidation…will you sell my shares first or my cash component first or my non cash component first or together ? How will you proceed if, you do choose to sell my pledged securities to recover the 50k loss???
b) Ask for cash through email ??
c) Inform me that you are deducting the cash from my ledger(assuming that cash is available)??
d) square off all my positions?
e) If Zerodha decides to square off, then at what point ? At 5k loss or 5L loss?( again I am talking about non booked loss)
Tomorrow if the vix surges, will Zerodha change the haircut of debt mutual funds? (Ideally it shouldn’t change)
Please take your time and provide me with accurate answers as these doubts are very important to me and I will use your reply as a reference to pledge and utilise my securities…thank you
You can take overnight positions, but to buy Options you will still need cash in your account, the collateral margin cannot be used to buy Options.
When haircut % increase, the collateral margin you have received will decrease.
If you have open positions and your collateral value decreases, it will result in margin shortfall. In such scenario you will have to add funds to maintain your position or RMS can either reduce or squared-off your positions.
Whether to change or not to change haircut depends on Clearing Corporation.
Options don’t have m2m, only thing is one need to maintain margins for options short, so one should have span+exposure at all times. Just try to maintain at least 10% additional cash than required to act as buffer in case if market went against you. If there is shortfall you should get a email informing the same.
Ok thanks for the tip I will maintain 10% additional cash but what about the losses ? If my position goes into loss then how will Zerodha adjust it with the collateral? In what manner ?
It depends on how much debit your account goes to, anyhow initially RMS may try closing position before your account goes short of margin but it case if it goes into debit then you need to make good of it via transferring cash or selling some holding.
So if I’m trading with 5L and I have additional 5L in my ledger then I don’t need to worry even if my trade goes south in the short run because I have chosen a very farther expiry and in the long run I believe the trade will tilt in my favour, the only thing that will happen is as my position goes more against me the margin money will go on increasing… am I right ??
2)Also if i was trading in futures then the loss would have to be adjusted at the end of the day and that too with cash right?
Yes, it has to be adjusted with cash not having enough cash will result in your account going in debit balance, on this there is 0.05% interest charged per day.
These are all bond etfs, so we are investing in debt instruments, but these etfs are tradable n listed. So, do these n other debt etfs qualify as equity instruments ? n do we gain LTCG tax benefits as equity instruments? Pls advise @Bhuvan@siva
you have included SBI MAGNUM GILT FUND REGULAR GROWTH as cash component but why didnt you guys included SBI MAGNUM GILT FUND DIRECT GROWTH as cash component??
This is due to an issue with the accepted funds from the clearing corporation.
@Bhuvan@Nakul@Neelesh Any updates here , what is the issue with SBI MAGNUM GILT direct plans ? I still don’t see it in approved security list. How much longer will this take
Are you saying it is approved by clearing corporations but not in Zerodha approved list? because we can add only if it is approved by clearing corporations
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@ShubhS9 thanks for your fast and prompt reply … really helpful.
I was misled by PR sundar , in his videos he always tells that Bharatbonds are liquid and can get 94% collateral amount . May be his broker allows it as liquid fund.
but I am actually wondering how Clearing corporation made it as non cash component !! its a debt fund right ?
also is there any link from NSE where i can see the actual approved list ?
