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I pledge stocks and use margin on it to trade F&O. How will interest charge be calculated? – General – Trading Q&A by Zerodha

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March 17, 2023
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I pledge stocks and use margin on it to trade F&O. How will interest charge be calculated? – General – Trading Q&A by Zerodha
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Roy



May 9, 2022, 10:14am


183

Shubham says:

May 9, 2022 at 2:32 pm

Hey Sunita, you can use 100% collateral margin received from pledging shares for selling options. However, you are required to maintain a minimum 50% margin in form of cash, and the remaining 50% in form of collateral. If you use more than 50% collateral margin then there will be interest charged at 0.035% per day. Just like it is now. You can check out more details [here]

@ShubhS9 Just to confirm, this 50% margin in the form of cash is required only for overnight F&O positions, right?
For intraday positions, no interest will be charged even if 100% of margins come from collateral component, correct?


brokenbull:

BankBee & NiftyBee (ETF) can be pledged? if so what is the cut off?

Yes, you can pledge BankBees and NiftyBees. You can check the list of all securities available for pledging here: Approved list of Securities at Zerodha. – Google Sheets

Pledge requests are processed in two batches, 2 PM and 5 PM. You can check out the entire process here: How do I pledge my shares to get collateral margin?

brokenbull:

This Non cash margin obtained by pledging can be sed for MIS Buy & sell in its full value?
Let us say I got 500k margin by pledging Niftybee. Can usefull ₹500k as MIS margin to trade MIS buy & MIS sell ? iwill have extra cash in the account if iam closing trades at a loss ofcourse by cut off time.

Yes, you can use 100% collateral margin for intraday trades.

brokenbull:

how fast the pledge works to create ? say i I click pledge 5000 units of Niftybee + 2000 units og Bankbee , by what time pledged margin will show in account of the same day/next day

If you place pledge request before cut-off time, the margin will be available for trading from next day onwards.

brokenbull:

THis non cash margin can be used for niftyfutues/banknifty futures both on MIS & onernigth basis?

Yes. However, for overnight positions you need to maintain minimum 50% margin in cash or equivalent and remaining 50% can come from collateral margin. You can learn more on this here: What is pledging and how does it work?



1 Like

Roy:

@ShubhS9 Just to confirm, this 50% margin in the form of cash is required only for overnight F&O positions, right?
For intraday positions, no interest will be charged even if 100% of margins come from collateral component, correct?

For intraday trades, you can use 100% collateral margin. The 50:50 Cash – Collateral requirement is for overnight positions. Just as it was before.



1 Like

Thanks a lot .I got it.
still have funds. if I run out of it , instead of taking loans against FD, i will pledge 50% of my ETF’s & try to trade intraday with the extra margin. :slightly_smiling_face:

@ShubhS9
this might sound silly but I need to ask this,
suppose I trade nifty intraday only and the margin required is 1lac. now if I have a cash balance of 80k and I have a pledge liquid bee of 1lac, in this 80k cash + 20k pledge balance will be used to open a position.
1}will I be charged interest on the 20k pledge margin used?
2} and if interest is charged then how much will it be?
3} when will Zerodha have a single ledger for both equity and mcx {anytimeline you can provide}?

hiren_parekh:

this might sound silly but I need to ask this,
suppose I trade nifty intraday only and the margin required is 1lac. now if I have a cash balance of 80k and I have a pledge liquid bee of 1lac, in this 80k cash + 20k pledge balance will be used to open a position.
1}will I be charged interest on the 20k pledge margin used?
2} and if interest is charged then how much will it be?

No, interest will not be applicable in this case. Interest is applicable only if you don’t maintain a minimum of 50% margins in cash or equivalent for overnight positions. The interest is charged at 0.035% per day on whatever additional collateral margin you use (greater than 50%).

For intraday you can use 100% collateral margin, there is no interest applicable.

hiren_parekh:

3} when will Zerodha have a single ledger for both equity and mcx {anytimeline you can provide}?

This is on our list of things to do. However, won’t be able to provide any timeline.

Hi Sir
I am intraday trader…No planning to pledge 10L worth shares…My question is for example if I made intraday loss of 30k what will happen to my pledged margin?

Hasan_V:

I am intraday trader…No planning to pledge 10L worth shares…My question is for example if I made intraday loss of 30k what will happen to my pledged margin?

The collateral margin you get from pledging securities cannot be used towards paying losses and charges. If you suffer losses and don’t have cash balance in your account, your account will result in debit balance (there will be interest of 0.05% per day applicable on the debit balance).

You will have to add funds to make good of the losses, failing which your pledged shares can be squared-off to the extent of losses. This support article explains the process in detail: Why were the shares I pledged squared off?



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