{"id":392437,"date":"2024-10-08T16:00:06","date_gmt":"2024-10-08T10:30:06","guid":{"rendered":"https:\/\/zerodha.com\/z-connect\/?p=392437"},"modified":"2024-10-14T12:44:23","modified_gmt":"2024-10-14T07:14:23","slug":"instantly-sell-pledged-cash-equivalent-securities","status":"publish","type":"post","link":"https:\/\/zerodha.com\/z-connect\/business-updates\/instantly-sell-pledged-cash-equivalent-securities","title":{"rendered":"Instantly sell pledged cash equivalent securities"},"content":{"rendered":"\n

Pledged cash-equivalent securities such as Liquid ETFs, Sovereign Gold Bonds, and Government Bonds can now be sold instantly without waiting to unpledge them.<\/p>\n

Previously, if you wanted to sell pledged cash-equivalent securities, you had to place an unpledge request on Console before 3:30 PM. These securities would only become available for selling the next day. This one-day delay not only caused inconvenience but also affected F&O traders who use these securities for managing margins and meeting mark-to-market (MTM) requirements.<\/p>\n

What are cash equivalent securities?<\/h3>\n

Instead of holding cash in their accounts, many traders prefer to invest in low-volatility securities such as Liquid ETFs, G-Secs, and similar instruments and pledge them for margin to trade in the F&O segment. Since these securities are less volatile compared to stocks, the collateral margin from pledging these securities is treated as equivalent to cash.<\/p>\n

This approach allows traders to manage their funds efficiently and also allows them to meet the minimum cash margin requirements set by exchanges for F&O positions. Exchanges mandate that 50% of the margin for F&O positions must be in cash or cash-equivalent collateral, while the remaining 50% can be in non-cash collateral.<\/p>\n

For instance, if you hold an F&O position with a margin requirement of \u20b91 lakh, you need to maintain \u20b950,000 (50%) in cash or cash-equivalent collateral, with the other \u20b950,000 in non-cash collateral.<\/p>\n

How to instantly sell pledged securities?<\/h3>\n

You can sell pledged securities instantly by placing a sell order as you normally would. The pledged quantity is displayed separately with a “P” symbol in Kite holdings, alongside any quantity that is not pledged.<\/p>\n

<\/p>\n

When you sell pledged securities, the collateral margin provided against those will be reduced from your account. Once the order is executed, you will receive 100% of the sale proceeds, just like any sale of free holdings. These funds can then be used for purchasing other securities, trading F&O, or any other purpose.<\/p>\n