I pledge stocks and use margin on it to trade F&O. How will interest charge be calculated?

Yep, hopefully early next week for stocks. MF platform should be live by end of the month, Check this http://mf.zerodha.com/home

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thanks!!! you are a boon to the investing community !!!

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Nithin : you need a dedicated team to make videos and tutorials to walk through each platform.

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The link says cash component means cash, bank guarantees, fixed deposit receipts, T-bills and dated govt securities. Are they also permissible?

They are permissible if it is in broker’s name, not in clients name.

I have liquidbees pledged as collateral, will that be considered cash or not. It does not show in my dp so i guess it is in broker’s dp

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Liquid bees will be considered as cash itself.

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Nithin -

  1. so for those who pledge LIQUIDBEES as collateral for trading in derivatives, this new margin rule is NOT applicable?
  2. Is the margin rule mandated by exchanges a new development?
  3. Different brokers seem to have different rules on the margin front. Why is that so?
    Ashwin
    Even I have the same queries. Can you please clariy ?

Even I would like to know the answers for these questions. Zerodha team can you please advise ?

  1. Yep, not applicable. Liquid bees will be considered as cash.
  2. Rule set by SEBI, followed by exchanges.
  3. SEBI evened out the field a few months bringing in this 50% rule. So going forward the above answer I gave will apply to all brokers.

Liquidbees is considered as good as cash, so no issues.

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  1. Does Zerodha accept Bank Guarantees payable on Demand?

  2. Assuming 1L in Stocks with 30% haircut i.e. 70K & 5L Bank Guarantee & no cash (or cash tied up in overnight position)…what will be the trading funds available (only MIS orders)?

  3. Assuming that whatever loss happens by the EOD at 3.30 is transferred to you online before 4.30…is any interest applicable?

  1. No
  2. BG will not be possible. So only 70k for both intraday and overnight orders.
  3. Ideally it should be transferred within market close. Because if one of the days our trade process happens before 4.30, it is possible that interest for that day will be calculated.
  1. Yep.
  2. Yep you can take position for 50k, but you will be using only 20k of yours (10k in cash and same amount in collateral because of the 50% rule) and 30k from our working capital. So 30k will be your debit balance at end of day, and interest will be applicable.
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Nithin, as per the communication sent, my understanding is that 15k will be the debit balance as he is providing 10k from the required 25k cash ? Pls correct me if my understanding is incorrect

Nithin, my understanding is also the same. Out of 50K, 25K should come from cash and 25k can from collateral margin. In this example, 25K collateral margin will come out of 40K collateral. But, the cash available is only 10K and hence the shortfall in cash is 15K (which comes from your working capital). So the interest should be calculated on 15K and not on 30K. Is it not correct? Please clarify.

Nitin, Sandy has a valid point, in this case Interest should be on 15k, Can you please clarify ?

Pledge button for liquidbees enabled. T1 pledge - disabled.
All fine now.

Hey @nithin, thanks for the detailed replies. Is there an option to pledge mutual funds (invested via coin platform?). I read that a few other popular brokers are providing this option.