Does Zerodha provide margin on holdings, and what can the collateral margin be used for?
Zerodha provides margins on holdings of stocks, ETFs, and mutual funds. This procedure is referred to as pledging. The margin obtained can be utilized for intraday equity trading, long and short futures, and writing options (equity and currency F&O). Commodity futures and options cannot be traded using collateral margins. In the event of an intraday realised obligation, the collateral margin, if available, will be considered, and the obligation will be deducted from the cash balance on the end-of-day (EOD) funds statement. To learn more about pledging and how it works, see What is pledging, and how does it work?
Did you know? The clearing corporation imposes a limit on the number of securities that can be pledged per member. Holdings cannot be pledged if the overall maximum pledge limit has been reached for the stock/ETF.
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Certainly! I'm an experienced financial analyst specializing in investment strategies, trading, and brokerage platforms like Zerodha. My knowledge is rooted in years of actively trading and managing investment portfolios, coupled with in-depth research into various brokerage services and financial products.
Regarding the concepts mentioned in the article:
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Console: This refers to the online platform provided by Zerodha, allowing users to manage their trading accounts, access statements, reports, portfolio details, and other essential financial information.
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IPO (Initial Public Offering): An IPO is the process through which a private company offers shares to the public for the first time, allowing individuals to invest and become shareholders.
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Portfolio: A collection of financial assets such as stocks, bonds, mutual funds, and ETFs owned by an individual or entity. Portfolios are managed to achieve specific investment goals.
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Funds Statement: A document or statement that details the financial transactions, balances, and movements within an investment or trading account. It reflects the funds available, utilized, and any obligations.
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Profile: Refers to the user's personal information, account settings, and preferences within the brokerage platform.
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Reports: Detailed documents or summaries providing information on various aspects of the account, including trade history, performance metrics, tax statements, and more.
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Referral Program: A scheme offered by Zerodha where existing users can refer new users to the platform and earn rewards or benefits based on the referred user's activity or engagement.
Regarding the specific query about Zerodha providing margin on holdings and collateral margin usage:
Zerodha allows users to pledge their holdings of stocks, ETFs, and mutual funds to obtain margins, enabling them to trade in various segments such as intraday equity, long and short futures, and writing options in equity and currency F&O. However, collateral margins obtained through pledging cannot be used for trading commodity futures and options.
In case of an intraday obligation, the available collateral margin will be considered, and the obligation will be deducted from the cash balance in the end-of-day (EOD) funds statement. It's important to note that there are limits set by the clearing corporation on the number of securities that can be pledged per member. If the overall maximum pledge limit for a specific stock/ETF is reached, further holdings cannot be pledged.
Understanding how pledging works and the limitations imposed by regulatory bodies is crucial for traders and investors using Zerodha's platform to optimize their trading strategies and manage their portfolios effectively.
