Pledge related questions

@siva @ShubhS9

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 -:

  1. 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?

  2. 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?

  3. 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.

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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Thanks @ShubhS9 for the quick clarification.

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

The collateral margin you get, changes according to current value and and haircut of the security.

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If I have pledged stocks and did covered calls with the collateral margin. And option expires in the money (ITM) and I don’t square off the option. Will the stock automatically get unpledged and exercised?

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You’ll have to unpledge the shares before expiry for physical settlement.

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So I have to unpledge it on Thursday or Wednesday?
But if I have taken 50% pledge collateral margin and 50% cash margin, then it means 100% cash margin I have to supply after unpledging for keeping options still expiry. This doesn’t sound good?
Other brokers though not transparent but still mentioned that you dont have to do anything. They will unpledge and settle against it (without me having to provide 100% cash margin)

Please clarify?

can i use liquid bees margin to trade intraday equity and hedge positions in option which includes buying and selling of options

You can use the collateral margin for intraday equity, trading futures and shorting options. For buying options you’ll need cash in your account, cannot use collateral margin.

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But . Liquidbees are cash equivalent. So no need of other cash to keep
.
Am I right?

Liquid Bees might be considered as cash equivalent but the margin is still collateral. So, for buying options you’ll need cash and cannot use collateral margin.

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Some Major Question…

Q1: For Example , If i had mutual fund investment of ( 5L ) and i get 450000 as collateral margin , and i need 700000 for option selling and distribute in such manner like (450000 as margin + 250000 as cash ) . Then on which amount 0.05% interest rate is applicable.

Q2: Can i use liquidbees full margin for option selling because liquidbees is cash component or i need to add extra 50% cash in my funds ?

Q3: Does 0.05% interest rate also applied on saturday sunday or on other non working days ?

For F&O positions, minimum 50% margin should come in cash or equivalent and remaining 50% can come from collateral margin.

If you use excess collateral margin ie. > 50% then there will be interest charged at 0.05% per day on excess margin.

You can use full collateral margin received from pledging Liquid Bees, as it is considered as cash equivalent.

Though, do have some cash in your account to cover losses and charges arising from trading, as collateral margin cannot be use towards this.

Yes.

Sir according to you
I need to pay 0.05% interest on 200000

  • Reason
    ( To maintain 1:1 ratio )
    For 700000 , I need to use in such manner (350000 as margin : 350000 as cash) .

  • But instead of this i use this in such way [(250000 as margin + 200000 excess margin) : 250000 as cash] .
    So i can get 700000 . So according to this 200000 is excess collateral margin .

Am i Right ?

For 7 lakhs margin. Minimum 350k should come in cash or equivalent and remaining 350k can come from collateral margin.

Out of 350k cash you’re only bringing 250k, and using excess 100k collateral. Interest will be on this 100k.