Just wants to understand if there are no funds/cash available in my account i.e zero but have huge portfolio of mutual funds can i pldege all my mutual funds. And wants to buy equities If yes what would be daily charges incurred or any penalties… Or if can’t pledge my mutual funds with zero cash balalnce in my account so in that scenario how much funds needs to be added in my account or mainatain so that there are no penalty or charges incurred
Hi @NAVED_34601497,
Yes, you can pledge your mutual funds on Upstox even if your cash balance is zero. The collateral received can be used across multiple segments - Equity Delivery, Equity Intraday, F&O buying, and F&O selling.
For F&O trading, the exchange requires a 50:50 cash-to-collateral ratio. However, Upstox provides the facility to use collateral even if you have less cash. The remaining amount is funded by Upstox and a daily interest of 0.05% per day is applied on the amount that is funded by Upstox.
You can read about it here: - Help Center
For equity delivery, you can also use collateral to buy stocks. You’re allowed to purchase up to the value of cash + collateral and the transaction is billed in your ledger at the end of the trading day. If you don’t have enough cash to cover the full amount, your account may go into a debit balance. You’ll get a 5-day window to clear dues, during which a Delayed Payment Charge (DPC) of 0.05% per day applies on the outstanding amount.
You can read about it here: Help Center
Hope this clarifies your doubt. Let us know if you require more help.
Let’s try to understand with an eg.
Account Balalnace 0
Mutual Fund Pledge received 5,00,000
Account Balalnace is now 5,00,0000
Now I buy stocks of Rs 5,00,000 for deliveries long term.
Now account balance is 0 again as I have use total amount of pledge mutual which I received.
In the above scenario what are the charges or penalty I will received on daily basis
Hi @NAVED_34601497,
Sure, let’s take your example.
Day 1 - Cash = 0 / Collateral = 0
You pledge mutual funds and receive ₹5 lakhs (post haircut) within minutes.
Now it will be:
Day 1 - Cash =0 / Collateral = 5 Lakhs
You now purchase stocks worth ₹5,00,000 for delivery.
Day 1 - Cash = 0 / Available Collateral = 0 / Margin Used = 5 Lakhs
At the end of the day, when the trade is settled and the ledger is updated with the transaction bill, your stock purchased is billed.
Day 1 EOD or Day 2 morning - Cash = - 5 Lakhs / Collateral = 5 Lakhs
Now, your stocks transaction is complete. Your pledged collateral is freed up again and you can reuse it for further trades. Post this, daily DPC of 0.05% will be charged on debit amount of 5 Lakhs which is Rs 250. You can choose to clear the debit in the next 5 days.
Hope this clears things up.
Thank you
Can I transfer my Mutual fund from Upstox to another broker and what is the procedure please…
Suppose, if there is a delay to clear the debt within 5 days, only interest will be charged or upstox will sell our mutual funds to clear the debt?
@SATHASIVAM_1959584 - Equity shares purchased under the delivery product type are required to be purchased by providing cash balance. Purchasing shares using margin pledge is an additional feature offered to the users. When shares are purchased using Margin pledge, the purchased shares are pledged in the CUSPA of the broker. Shares equivalent to 150% of the debit balance in the user wallet are pledged in the CUSPA.
Users can take the delivery of such shares by clearing the debit value in their wallet within 5 days from the Trade date post which the shares in the CUSPA account shall be invoked and liquidated to recover such debit balance. Hope this answers your query.
For intraday cash purchase of shares can i use the pledge margin (from pledged mutual funds and other shares in demat) and will there be any mandatory 50:50 cash requirement like F&O by exchange? PLs answer
Yes, you can use margin from pledging (mutual funds or shares in your Demat) for equity intraday trades as well. Unlike F&O, there’s no mandatory 50:50 cash requirement from the exchange for equity intraday. Also, no interest is charged, you can use the pledged margin freely.
Thanks. One followup quesitons please. Can I pledge cash equivalent funds like Liquidbees for trading F&O in commodities like Crude or natural gas
@SUBHENDU_1306462 - Please note that using collateral margin for commodities is being rolled out to the users in a phased manner this week. You will receive or would have received this update.
There will also be a dedicated communication from our end. You can go ahead and try using collateral margin for commodities. There’s a chance that you’d be able to do so. If not, then you’d be able to do that in a couple of days. Thanks.
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My stocks are pledged in the CUSPA due to delay in adding funds. But when i see the reports it do not have any cash shortage as per the Interest charged reports, but still upstox did not notify in app, actions required, no sms, no whatsapp msg, no call, no automated call to inform, just two emails and post 5 days deduct the amount ? is there any solution for user who checked their emails after 5 days and added funds back ?