Skip to main content
Question
F&O
Asked a question 4 months ago

Hi fyers team, Can you explain with the change in policy regarding 50-50 cash component is mandatory from October 10th 2022. Also can tell what is the current margin usage and post October 10 2020. Earlier, if a client A has 10lkhs in cash balance. He can invest in stocks or MFs and pledge them for collateral margin. So, in client A has invested in stocks worth 10L and pledged them. The collateral he receive is 8 L assuming 20 % hair cut. The client can utilise 8L for FnO postions both intraday and overnight. With new change in policy to utilize the collateral margin of 8L does he have to bring additional 8L as cash?. That he needs to 18 L total in his account?

Join FYERS Community to pick others' brains on Trading/Investing

Hi @Swaroopmummidi,

From the example you have mentioned above, let's say you have ₹8 Lakh as collateral margin (post haircut). In order to use that entire 8 Lakhs collateral, you must maintain ₹8 Lakh in Cash. However, let's say you add only 2 Lakh. Then you will be able to trade with a margin of up to 4 Lakh (2 Lakh cash+ 2 Lakh collateral). The rest of the amount cannot be utilized. 

This policy has been implemented to avoid penalties and interest charges arising from debit balance (Negative).

For more details, refer to this notice.

New rule is simple, say you have 2 lakh in cash, and have 5 lakh as margin against collateral from pledging of shares. so for trading you will get 2+2 = 4 lakh, and for buying stock only 2 lakh ( from cash) you will get.