Can I pledge my holdings to take an F&O position?
Trading margins for equity and F&O positions can be availed from pledged securities. However, it is important to note that margin requirements differ between segments.
In this case, overnight F&O positions require:
- A minimum of 50% of the margin is to be maintained as cash or cash equivalent collateral.
- The remaining can be brought as cash or pledged margins (after the applicable haircut).
- If 50% of the margin is not maintained as cash or cash equivalent collateral, interest will be charged on the shortfall amount @ 0.05% per day.
Let's look at a few scenarios where a client maintains margins as cash and pledged securities:
| Total Margin | Pledge Margin | Cash Margin | Interest Chargeable Amount |
|---|---|---|---|
| Rs. 10,000 | NIL | Rs. 10,000 | NIL |
| Rs. 10,000 | Rs. 3,000 | Rs. 7,000 | NIL |
| Rs. 10,000 | Rs. 5,000 | Rs. 5,000 | NIL |
| Rs. 10,000 | Rs. 7,000 | Rs. 3,000 | (10,000 * 50%) - 3,000 = Rs. 2,000 |
| Rs. 10,000 | Rs. 10,000 | NIL | (10,000 * 50%) - NIL = Rs. 5,000 |
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