Liquidbees/pledge questions

[starttrade]

Hi,

I was looking at all the material on Liquidbees. I had a couple of questions;

Q1) As mentioned in the webinar, a Zerodha user can buy a stock and sell Liquidbees and at the end of the day the proceeds from Liquidbees will be used towards purchase of share.
Also in the pledge Zerodha how-to, in the 50:50 margin section, it was mentioned that Liquidbees is considered as cash by SEBI hence the total amount can be used as margin.

• My question is if I have Rs.50k in my account, i go ahead and buy 50 Liquidbees. My cash balance is now Rs. 0 and Liquidbees balance is Rs. 50k. Now I am waiting for ITC to hit 180. Can I put in a buy order for ITC at 180 x 100 shares and then if my target hits, i go ahead and sell the Liquidbees equivalent? And if the target does not hit the order is cancelled.
• What if the target hits at 15:29 hrs. Can I sell Liquidbees after market hours to fulfill my obligations?
• In case of Derivatives, my entire margin required can come from Liquidbees? Only the daily loss, if any, will be taken from my cash balance?

Q2) What is the cost of buying/selling Liquidbees?

Q3) In the webinar it was mentioned that Liquidbees dividend is tax paid. I believe now it isn’t so, and for user purposes it is normal income and tax paid is according to tax-slab of individual taxee. Is that correct?

Q4) Looking as the Liquidbees chart, price above Rs. 1000 is red (loss?) and below is green (loss?)

Q5) In the pledge Zerodha how-to, to pledge I have to go to Console > Porfolio > Holdings. > mouseover share I want to pledge > Option > Pledge > …
Are the shares pledge-able T+2?

Thanks for your time!

[ShubhS9]

@starttrade

• My question is if I have Rs.50k in my account, i go ahead and buy 50 Liquidbees. My cash balance is now Rs. 0 and Liquidbees balance is Rs. 50k. Now I am waiting for ITC to hit 180. Can I put in a buy order for ITC at 180 x 100 shares and then if my target hits, i go ahead and sell the Liquidbees equivalent? And if the target does not hit the order is cancelled.
• What if the target hits at 15:29 hrs. Can I sell Liquidbees after market hours to fulfill my obligations?

You will need funds in account to place Buy order for ITC, not having funds will result in your order getting rejected due to insufficient funds.

Also, Liquidbees cannot be sold after market hours.

@starttrade

In case of Derivatives, my entire margin required can come from Liquidbees? Only the daily loss, if any, will be taken from my cash balance?

Yes, your entire margin can come from Liquidbees as these are considered as cash equivalent. But this margin cannot be used to settle your losses or charges arising from trading, for that you will need cash in your account.

For Q2, Q3, everything has been explained in detail here: Everything you need to know about Liquid Exchange Traded Funds (ETFs)

@starttrade

Looking as the Liquidbees chart, price above Rs. 1000 is red (loss?) and below is green (loss?)

Price of Liquidbees stays constant at 1000, looking at fluctuations in charts isn’t of any help.

@starttrade

In the pledge Zerodha how-to, to pledge I have to go to Console > Porfolio > Holdings. > mouseover share I want to pledge > Option > Pledge >

The process to pledge securitues you are holding has been explained in detail here.

@starttrade

Are the shares pledge-able T+2?

You will be able to pledge securitues only after they are credited to your Demat account on T+2 days.

[starttrade]

thanks for your reply @ShubhS9

@ShubhS9

You will need funds in account to place Buy order for ITC, not having funds will result in your order getting rejected due to insufficient funds.

So, I can’t first sell Liquidbees and then buy shares, in the same day? I have to have cash balance to initiate a buy order for shares?

Thanks.

[ShubhS9]

@starttrade

I can’t first sell Liquidbees and then buy shares, in the same day?

You can first sell Liquidbees and use the proceeds received to buy shares.

Keep in mind though, due to peak margin reporting rules, you will only get 80% of the sale value, 20% will be blocked for the day and will be available from the next trading day. You can learn more on this here.

[starttrade]

@ShubhS9

Keep in mind though, due to peak margin reporting rules, you will only get 80% of the sale value

Thanks! This is good info.

The process of pledging of Liquidbees is exactly the same as Shares? Pledge from Coins, follow email link, and so forth? Liquidbees when unpledged before 2pm, can only be sold the next day. Am i correct?

[ShubhS9]

@starttrade

The process of pledging of Liquidbees is exactly the same as Shares? Pledge from Coins, follow email link, and so forth? Liquidbees when unpledged before 2pm, can only be sold the next day. Am i correct?

Yes, the process for pledging is the same. You will have to place a pledge request from Console, not Coin. Can read this for a detailed walkthrough.

Yes, if you place an unpledge request before 2 PM, Liquidbees can be sold from the next day onwards.

[RLM]

@ShubhS9

You will need funds in account to place Buy order for ITC, not having funds will result in your order getting rejected due to insufficient funds.

but , intraday MIS would be possible . correct ?

is the TDS rule applicable in liquidbees ? should i submit form 15G to avoid the TDS ?

[ShubhS9]

@RLM

but , intraday MIS would be possible . correct ?

No, funds are needed to place MIS orders as well.

@RLM

is the TDS rule applicable in liquidbees ? should i submit form 15G to avoid the TDS ?

Explained by @Quicko here:

How does taxation work on liquid bees since all gains are in terms of dividends and price remains the same?

Dividend on Liquidbees - As per Section 194K, TDS should be deducted on the dividend at the time of credit to the payee’s account or at the time of payment by any mode. Thus, TDS must be deducted even if the dividend is paid in the form of units and not cash. TDS at 10% (7.5% for FY 20-21) should be deducted if the dividend exceeds INR 5,000. Unit holder can provide Form 15G or Form 15H for deduction of TDS at lower rate. For any further queries, write to us on [email protected]

[RLM]

@How does taxation work on liquid bees since all gains are in terms of dividends and price remains the same?

Unit holder can provide Form 15G or Form 15H for

How to provide it ? Where to provide it ? Whom to provide it ?

[starttrade]

@ShubhS9 thank you

[RLM]

Liquidbees is 100% cash equivalent. Then why 10% haircut in pledging ? 10% is very huge !!!
@siva

[Prayag]

The haircut is decided by the clearing corporation (check the latest NSE Clearing Limited circular) -