Not all stocks in the portfolio are eligible for pledging. The eligible scrips for pledging can be verified by referring to the ‘list of eligible scrips’ available under the margin pledge.



These eligible scrips are categorised into cash and non-cash equivalents for further clarity.


1. What is the cash equivalent?

Scrips categorised as cash equivalents are treated similarly to cash. For calculation purposes, the equivalent amount is included as part of the cash balance not from collateral, and interest is computed solely on the remaining shortfall amount.

Example

Since we have a cash equivalent, the interest is charged only on the shortage amount after deducting the cash equivalent.


Details 

Amount

Cash

₹0

Collateral available

₹1,00,000

Collateral used

₹50,000

Cash collateral ratio 50%

₹25,000 (50% of collateral used)

Cash shortage

₹25,000

Cash equivalent

₹10,000

Amount eligible to be charged interest 

 ₹15,000 (Cash shortage - cash equivalent)


In the case of non-equivalent scrips, where there is no cash equivalent treated as cash, interest will be charged on the total shortfall amount.


Details 

Amount

Cash

₹0

Collateral available

₹1,00,000

Collateral used

₹50,000

Cash collateral ratio 50%

₹25,000 (50% of collateral used)

Cash shortage

₹25,000

Cash equivalent

₹0

Amount eligible to be charged interest 

 ₹25,000 (Total cash shortage for noncash equivalent scrips)


2. What is the cash collateral ratio?

The cash to collateral ratio for the margin requirement must be 50:50. Whenever the available cash is less than 50% of your margin requirement, it would be considered a cash shortage. Such shortages would be liable to interest charges @0.05% per day.


3. How is Margin shortage calculated along with the interest?

Here is the detailed calculation with an example:

If you have a Futures position with a margin requirement of ₹1,00,000 


Details

Amount

Futures position with a margin requirement 

₹1,00,000

Available Ledger balance

₹10,000

Margin received a post pledging shares with Upstox

₹80,000

Cash required as per the collateral ratio (50:50)

₹50,000 (50% of ₹1,000,00)

Interest charged

0.05%


Here the cash collateral ratio is less than 50% as the ledger balance is ₹10,000

So, the Shortfall amount - ₹50,000 [50% of ₹1,00,000 (Margin requirement) ] - ₹10,000 (Ledger balance) = ₹40,000.

An interest of 0.05% per day will be applicable on ₹40,000.


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