Requirement for 50:50 Cash & Collateral

F&O
22

Hi @ShubhS9

Can collateral from Liquid Bees or ETF be used to BUY OPTIONS since collateral from Liquid Bees is considered as Cash Equivalent?

23

No, you cannot use collateral recieved from pledging Liquid Bees or any other instrument to Buy Options, even Equity Delivery isnā€™t possible, for both you will need cash in your account.

The margin you receive can only be used for Equity Intraday, Buy/Sell Futures and Sell Options.

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24

@ShubhS9 samco provides full margin against stock without 50;50 rule , can you check how is it done and is it okay from regulatory standards.

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25

No, this is not fully okay as this may end up using other clients money to show margin to other client.

26

Sir, and instead of liquid bees it can be any security mentioned in the ā€œCash Componentā€ tab in ā€œApproved list of Securities at Zerodha.ā€ link ?
If yes, then why is my cash balance shown as negative ? inspite of me having more collateral (liquid funds ) than collateral (equity) ??

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27

Maybe can you post screenshot?

29

Cash balance is actual cash, not cash equivalent, just to distinguish between actual cash and liquid collateral and stock collateral.

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30

so do I have debit balance. Or my negative cash balance will be adjusted with collaterals?
Just making sure I donā€™t own any interest.

31

Not in this case, make sure your margin(span+exposure) is funded by atleast 50% liquid collateral and rest with equity collateral.

32

Thanks Sir , thatā€™s helpful.
Is Zerodha looking to add this calculation in Console? , so we know directly, if we have a debit balance or not.

33

Can someone please clarify this? Iā€™m pledging liquid funds listed as cash component by zerodha for 1 lakh. After haircut, can I use the 90,000 from the pledged amount to buy and hold equity shares delivery? - without additional cash

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34

The collateral margin you receive from pledging securities cannot be used to buy stocks, for that you will need cash in your account.

The collateral margin can only be used for Equity Intraday (MIS), Trading Futures and Shorting Options.

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35

The collateral margin you receive from pledging securities cannot be used to buy stocks, for that you will need cash in your account.

Thanks ShubhS9. Another query. Will I be able to sell my equity shares from holding without additional cash in my trading account? If not, will I be able to use the pledged liquid funds margin for that purpose?

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36

Yes, you can sell shares from your holdings without having extra cash, you donā€™t need margins to sell shares from your holdings.

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37

Suppose I have 5 Lac Liquid bees collateral and 5 Lac Equity pledged collateral and there is zero liquid cash in my account, Now how much overnight position I can create in option selling without any interest liability.
@siva @nithin @ShubhS9

38

As youā€™ve 10 lakhs in your account. You can take position upto that extent.

Though, it is ideal to keep some cash in your account to cover for losses and charges, as you cannot use collateral margin towards this.

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39

Hi,

If I am using colateral margin for index option selling (MIS) and closing all positions before 3:20pm, is this 50% cash margin policy applicable on me?

Sourav

40

Hi @ShubhS9 @siva ,

I have the same question as Sourav

If I am having collateral margin of 9 lakhs (10lkh worth non cash MF pledged to get margin of 9lkh) and cash of 1 lakh, can I use this for index option selling (MIS) for 9.5lakh and closing all positions before 3:20pm.

Would that be okay as it is an intraday position or would I need to pay the 18%p.a change on the shortfall of 4.25lakhs (50% of [9.5lakh margin - 1 lakh cash] ?

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41

Should be okay for intraday but ideally one should have 50/50 ratio.

42

@siva @ShubhS9

Given the way the calculation of margin works in kite. Can you confirm if my understanding is correct.
Suppose If I have cash balance of 10L and pledged collateral (Non cash) of 15L, that bring total margin available at 25L and I take a position of 24L.

Out of the 24L, 50% would be reduced from collateral bringing that balance to 3L (15L-12L) and the cash balance will appear as -2L (10L - 12L) with Total margin available as 1L (25L - 24L).

Would this -ve cash balance (given its only intraday) lead to an interest charge of 0.05% per day or would the -ve balance not matter as far as the position is intraday.

Would the -ve cash balance impact my trades/orders (FnO and further MF purchase) or would the system be smart enough to allow me to place order and purchase order as the cash balance is only -ve during the day

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