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 MarginPledge MarginCash MarginInterest Chargeable Amount
Rs. 10,000NILRs. 10,000NIL
Rs. 10,000Rs. 3,000Rs. 7,000NIL
Rs. 10,000Rs. 5,000Rs. 5,000NIL
Rs. 10,000Rs. 7,000Rs. 3,000
(10,000 * 50%) - 3,000
= Rs. 2,000
Rs. 10,000Rs. 10,000NIL
(10,000 * 50%) - NIL
= Rs. 5,000

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