Who uses F&O Money?

Money invested in equities utilized by corresponding equity company. In case of FNO (stock futures & options) who uses that money? In case of NIFTY options and futures, who uses the money?


Hi Simplebuthard,

The money you invest is not utilized by the company, unless the company is raising money for the first time (IPO). For a listed company the money you put in is actually an investment that you make in your name. So in essence you are utilizing your money towards an investment in the company.

In case of futures and options, the money is used (blocked) up as margins. Blocking money towards margins is a standard risk management practice.


In F&O or equities, the money always moves from one trader to other trader. It does not go the company.

Only brokerage firms earn on both sides, both Buy and Sell. Those are charges incurred on both parties.

Excluding brokerages and other charges, you can say trading is a zero sum game. The buyer gives a particular sum which is transferred to the seller. Money moves within the trading community.

If by trading activity the value of share increases, the worth of money what the promoters of the company hold increases, and the company image improves. Thats the benefit associated for the underlying companies.

Reverse is also true. If price of shares decrease, its because the company is not performing well. Then the worth of shares with promoters decrease (like a punishment, you can think of)

To add on, the margins for F&O is blocked by the exchanges.