I have a question about pledging stocks on Zerodha. I understand that we need 50% in cash component and 50% from collateral. But, if we do not have the cash component, can we do this?
I pledge 10 Lakhs worth of stocks. After 50% haircut, I get say 5 lakhs as margin.
I do not have any cash in my funds. So, can I trade with 2.5 lakhs without funding my account with any additional cash?
When using collateral margin to trade F&O, the shareholder must have 50% of the margin requirement in cash or cash equivalents. If not, interest at 0.035% per day will be charged on the cash component funded by Zerodha.
So, the 50% of the unused margin is not considered cash equivalent?
You can use the 100% collateral margin you have received for trading. However, for overnight positions, minimum 50% margin needs to be in cash or cash equivalents and remaining 50% in non-cash collateral. If you’re using more than 50% non-cash collateral margin, then interest will be applicable at 0.035% per day.
Also, collateral margin in your account, be it cash or non-cash, cannot be used towards paying changes and any losses you make, for this you will need cash in your account, else the account will go in debit balance, on which interest of 0.05% per day will be applicable.
Thank you. That answers my query.
“Also, collateral margin in your account, be it cash or non-cash, cannot be used towards paying changes and any losses you make, for this you will need cash in your account…”
I am trying to better understand this statement.
Lets assume I have 5 lakh Margin from pledged stocks. No cash is added further so my account margin is 5L. Now say, I am doing only intraday trading and on day 1 I incur a Realised loss of 20K. Do I need to add this 20K to my funds account??
Please clarify??
Yes, you are required to deposit additional funds; otherwise, delayed payment charges shall be applicable.