1- When I pledge my shares, they remain in my demat account plus I’ll get all the benefits even after pledging the shares like bonus, corporate action, dividends etc. Is my understanding correct?
2- When I pledge my shares and share value increases to a new value which is greater than the value at which I pledged. So when I unpledge them I’ll get all the shares with new value only right?
3- Above points are also valid of pledged Mutual Funds as well?
Yes, the shares remain in your Demat account and you are eligible to receive benefit of all the corporate actions.
Right. Also, the collateral margin you get changes according to price variations in the security pledged as the collateral amount received is calculated from the previous closing price of the securities after haircut. You can check out this support article to know more on how pledging works.
1 Can I use the margin to buy more stocks as a long term investment (CNC) or it can only be used for intraday trading?
2 For any buy I can use only 50% margin and 50% should be cash. So with rest of the 50% of margin can I buy another stock? What can I do with rest of the 50% margin?
The margin received from pledging cannot be used for taking Equity delivery positions. It can be used for trading Equity Intraday, futures & options writing(Selling)
Exchanges stipulate that for overnight F&O positions, 50% of the margin needs to compulsorily come in cash and the remaining 50% can be in terms of collateral margin. This means that if a overnight future positions requires 1.2 lac Rupees as margin, only 60k can be used as collateral margin, remaining 60k should come from cash equivalents (liquidbees etc) or cash. It doesn’t matter if you have 1lac as collateral margin or 60k as collateral margin, you can use only 60k (50 percent is not calculated as per your available collateral margin but on the position).
Suppose you have 1lac as collateral margin and you have used 60k for an overnight futures position of 1.2lacs. You can use 40k to take another position.
When you say Liquidbees is cash equivalent, how does it work in case of MTM loss ? Will units equivalent to MTM loss will be debited ? And what happens when there is a huge MTM gain {much more than the liquid bees units I have pledged as cash equivalent } ? What will be credited to my account - cash or liquid bees?
Margins received from pledging liquid bees can be used as cash equivalent. The units won’t be debited or credited in MTM loss or gain. If you have traded with Collateral margins & incurred a loss, you will need to bring in additional funds to make up for the MTM loss. In case you don’t the RMS team could sell your pledged shares/liquidbees to make up for the loss.
Say I have 20 lakhs as Collateral and no Cash in Account.
I sell options intraday only,
When I sell options under MIS, Cash balance will be in negeative, does zerdoha charges anything for this negative balance intraday?
All positions will be closed intraday, if any loss, will transfer Cash within the same day.
Also I say I have Collateral margin of 20 Lakhs and never use it, it is just sitting idle, does Zerodha charge anything on this Idle Collateral amount?
50-50 rules is applicable for overnight F&O positions where 50% should be in cash (or cash equivalent) and remaining 50 percent can be in terms of collateral margin. Yet it’s advisable to follow 50-50 rule in intraday option shorting too.
If you’ve taken an short option position of 20 Lac with collateral margin only, you’d be seeing 10 lacs as negative cash balance. However, if you’re not carrying that position overnight and closing it on the same day as you mentioned intraday, then there will be no charges on this negative balance.
If you’re carrying that position for the next day, and you don’t have enough cash, your account will be in debit balance and there will be a delayed payment (interest) charge of 0.05% per day applicable to the debit amount.
No, Zerodha doesn’t charge on idle collateral amount.
I think you mean to say intraday or overnight, you won’t be able to take delivery of the stocks using collateral margin.
There will be a delayed payment charge of 0.05 % per day applicable to the debit amount as mentioned. You can read this thread for more clarity on this.
If you fail to meet your margin obligations, the broker will have the right to invoke the pledge and sell them to clear the dues.
