Quarterly settlement and New mutual fund rule

General
1

Hello Folks…

Looks like new rule kicked in from July and we cant invest in Overnight fund(ICICI for ex) directly from funds in trading account. It used to be okey to do it, but now it should be from bank account.

Now, is there any alternative to avoid this quarterly settlement?

Thanks in advance.

2

I keep most of my capital in overnight funds and pledge it for margin + keep some balance in cash to cover drawdown. Works well.

3

Now I am unable to buy overnight funds directly from trading funds. That’s where I am stuck.

4

Iam a newbie… :relieved:
I have never clicked coin tab. Neither i invest in anything peddled there.
I keep trading funds in account ( not less than 7 lakhs & more up to 2-3 million between trades) . I only trade stocks & etf. Not invest.Sometimes i pledge nifty bee& bankbee if iam struck to get extra intraday margin.

If no trading ideas, i RTGS back excess funds back free to my bank ( 7% sb interest in Equitas & between 5.5 to 6% sb interest in others like AU smb ,dcb, rbl bandhan etc)
I see mention of icici overnight fund. ! What is the overnight interest rate? Suppose we buy stocks on mis & we need extra balance to convert to cnc, can we liquidate those overnight funds in a few hours notice?
What is the minimum duration to close over night fund to get full credit in trading acct?

1 Like
5

Rate is less than liquid mutual funds due to higher safety. Currently around 4.8% (Minus expense ratio) - from https://www.ccilindia.com/Pages/default.aspx
I intend to hold them for many years and get LTCG on them. There will probably be atleast 1 day delay from selling to having money in bank account. NAV changes daily. Probably best to use liquid bees for frequent transactions although i don’t see the point as you will have transaction charges on them.
Too much hassle for peanuts in moving around money like this. Through pledging anyway we can get additional returns through trading on top of whatever funds give.

Yes, so its a bit more inconvenient in this use case. You will have to move money to bank and then buy mutual fund and next day pledge it. Can do it in parts to reduce impact on trading. But once set, you can get margin on them and that is not affected by settlement. So that headache goes away.
Note that you cannot buy options with pledged margin i think - not sure if this applies to cash equivalent like liquid/overnight funds - check.

2 Likes
6

So, there is no other option to avoid this quarterly settlement? Anything?

Can anyone suggest any other alternative to park trading funds for shorter period with minimal risk? any ETF’s similar to debt mutual funds.

7

you have liquid bees …

1 Like
8

thanks . just placed an order for niftybees(Nippon india liquid bees).

9

Niftybees is Nifty Index ETF.
This is liquidbee - https://www1.nseindia.com/live_market/dynaContent/live_watch/get_quote/GetQuote.jsp?symbol=LIQUIDBEES

1 Like
10

Spaceman
Thanks for clarifying. Since I am too short term focused both liquid bee & icici overn ight fund may be of no use to me. If one trades futures or selling options good tool to earn some interest on the pledged funds.

11

Thanks mate. I bought Liquidbee. My niftybee was a typo.