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

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.

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.

@nithin
I only have Liquid Bees in my account.
I have pledged all of them. 0 cash.
Now if at the end of the day I am at 5000 MTM.
So how is this settled?

  1. some liquidbees immediately sold? If yes, then by whom?
  2. I am not able to sell them as I have pledged them right?
  3. Is there any interest charged if debit amount is carryforward?

Not currently, we plan to have soon - but only on growth funds.

We wouldn’t sell any if the loss is say under 5 to 10% of your liquid fund portfolio. But this again isn’t a rule, it is prerogative of our RMS team based on their perception of risk. Best to always have some extra cash in your account. But losses mount, yes our RMS team will sell it coz client can’t. Yes there is interest charged on the debit as you’d be utilizing our(broker) funds.

If I pledge liquid bees for one month. will i be getting dividend at the end of month?

If I pledge liquid bees for one month. will i be getting dividend at the end of month? If not where the dividend went?

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Yes, Liquidbees dividends are usually paid out once every 28 days. For whatever period of time the units of Liquidbees were held in our account after you having pledged them, we reconcile dividends and credit them to your demat account.

Hi,

What I have understood after going through this thread that one can’t buy stock from margin funding? Is my understanding correct? Some brokers allow you to buy stock from margin funding also and dey charge interest in lieu and you have to clear the balance in T+6 days otherwise your accounts get blocked. Is this facility not available in Zerodha?

Hi @gaurav_jain,

Yes, like you said, currently margin funding facility is not available in Zerodha, but we have acquired a licence to do this( an NBFC licence) and are in the process of rolling out a product shortly.

Cheers,
Lindo

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