Pledged stocks FIFO rules

General
1

Dear Senior members,

Please help me to learn on this FIFO scenario and pledged share combination .

  • I Have a 100 Liquidcase (or any stocks)

  • Pledged 100

  • Added 10 More Liquidcase

  • Sold 10 Nos after 3 days.

Question : Are the 10 Nos will be deducted from the pledged shares or from the Second purchase ?

2

Pledge is just a number in terms of quantity, FIFO will apply to date of purchase.
So when you sell 10, it’ll be the 10 from the first purchase and not the last 10

3

Thank You @Chirag1 ,

My Confusion arises from this Misunderstanding .

  1. Every stock have unique identifier called ISIN no (This is true always)
  2. Each share of a stock also have some unique identifier (Not sure about it)
    3 . Pledge have list of shares (include Unique share identifier) already pledged.
  3. So FIFO will avoid these shares
4

Point 1 is correct. Point 2 and 3 are not as there is no such unique share identifier for each share of a scrip as shares get bought and sold through a trade ID/order ID and the ISIN is unique only to individual instruments.

Now, as per your initial example, if you sell 10 shares, only the free shares will be sold and you continue to get the collateral margin for the 100 shares pledged. But, the next day, when you will check your realized P&L and buy average of the 100 shares, it will be calculated as per the FIFO method.

So, technically there is no change in the pledged quantity and you receive the credit for the sale of 10 shares as per your sell price only but the P&L and the buy average gets computed as per FIFO method.

1 Like
5

Hi @IR_B Thank You for the Info .
Happy to know that it remain as simple as this , Your explanation help me to know the basics of basic .
Thank You …

I have also checked this article
https://money.stackexchange.com/questions/60618/does-an-individual-share-of-a-stock-have-some-kind-of-unique-identifier