Hi, a pretty basic question on pledging. Lets say I have 1 lakh rs in a CPSE ETF and get 85,000 rs worth collateral after the haircut. Now can all of the 85,000 be used in overnight F&O positions only or will I be able to use only 42,500 worth it?
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CPSE ETF isn’t considered as cash equivalent. So if your overnight position needs 100k, 50k will be used from collateral from CPSE ETF while 50k should come from cash.
Hi Guys,
What will happen to our current open positions when new pledging system goes live?
Do we need to close our positions and unpledge the shares?
And again we need to follow the new pledging procedure to get the collateral margin?
Thanks
Thanks for the reply.
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Dear Shubh, wanted to ask you another question on the same subject since you seem well versed with the nuances of it. With the same example mentioned above, will I then be able to use 85% of the capital pledged on intraday trades? Thank you once again.
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Yes you can use for Intraday trades, there is no 50:50 Cash - Collateral requirement for Intraday but you will still need cash to buy Options.
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Thank you. No plan to trade options. I suck at it.
When do you plan to add more ETFs which can be pledged like ICICILOVOL, ICICIALPLV (ICIC Low Vol ETFs)? The 2nd one got listed in August itself. From NSE, there is very low haircut on these.
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I had placed unpledge request on Console of my LIQUID FUND on 3/9/2020. Even after 2 days it was not unpledged. When it will gets unpledged? How much time required for unpledge that LIQUID FUND ?
What time required for redeem LIQUID FUND from coin to trading account?
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Hi Shubhs,
Thanks for the clarity. If I invest 50% in non-cash component and 50% in cash component securities for collateral, will I be able to hold overnight option writing positions? or should I bring in 50% in cash only for holding overnight option writing positions. Pls. clarify.
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Yes, you can hold overnight F&O positions.
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If I’m looking to trade only Intraday F&O do I need to have 50% in cash or would 100% in terms of collateral margin would also work and I would need cash only for MTM.
Or would I need to comply with 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin?
In above link, it’s written that…"since the stocks are held in the broker’s collateral account, the broker is the recipient of all cash and non-cash corporate actions like dividends, bonus, rights, etc. While the broker is required to voluntarily transfer these benefits to the investor, a non-savvy investor may miss out on claiming such credits in the event that the broker doesn’t…
And in the below image, it’s written that dividend gets credited directly in bank account.
My questions -:
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Does dividend get credited by “Zerodha” in my bank account OR does the dividend get credited by the “dividend declaring company” itself directly in my bank account as done in the case when the shares are not in a pledged sttate?
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If Zerodha is receiving this dividend and then transferring it to my bank account, how long will the process take from the day company has actually credited dividend against my shareholding? And will you notify about such dividend credit transaction clearly to me?
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And what happens when there is stock split done by a company or there is any other corporate action on my shares? Do you notify about increase in my share count of my pledged shares?
For intraday trades too, minimum 50% has to come in cash or equivalent and remaining 50% can come from collateral margin.
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Under the new pledging system, shares stay in your Demat account only. So any corporate action will be directly passed on to you by the company RTA, just like it is when you’re normally holding shares in your Demat account.
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If I have pledged my mutual funds and got 5 Lakh margin, similarly I have pledged my Liquid funds for cash component and got 5 Lakh cash component as collateral.
then I have a loss of 50,000 Rs. What will happen? In case I can’t add any more funds, how will the loss be squared off?
If you fail to add funds to make good of debit balance, your pledged shares can be squared-off to the extent of debit balance. You can learn more here.
i pedge my mutal fund got 1071000 margin then after next day margin reduced to 1054400 i have no selling position all are closed pl explain why