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What is the 50% Cash-Margin Rule in Futures and Options?
SEBI mandates that for trading in the F&O (Futures & Options) segment, the brokers must ensure that a minimum of 50% of the total margin required is in the form of cash for all the positions in the F&O segment.
The rule aims to reduce the risk of defaults and market volatility by ensuring customers maintain a sufficient cash component for their F&O trades.
Cash Component: A minimum of 50% of the total margin must be in the form of cash or cash equivalents, such as liquid funds or readily available cash in the trading account.
Collateral Component: The other 50% can be fulfilled by pledging approved securities like stocks, ETFs, or other eligible assets.
Example: Suppose your total margin requirement is Rs. 3,00,000. You are required to maintain at least ₹1,50,000 (i.e., 50% of the margin) in cash or approved cash equivalents—such as ledger cash, Liquid Bees, or select debt mutual funds (After deducting the haircut). The remaining Rs. 1,50,000 can be fulfilled through pledged securities or additional cash equivalents .
If your cash or cash equivalent balance is less than Rs. 1,50,000, interest will be charged on the shortfall.
The rule aims to reduce the risk of defaults and market volatility by ensuring customers maintain a sufficient cash component for their F&O trades.
Cash Component: A minimum of 50% of the total margin must be in the form of cash or cash equivalents, such as liquid funds or readily available cash in the trading account.
Collateral Component: The other 50% can be fulfilled by pledging approved securities like stocks, ETFs, or other eligible assets.
Example: Suppose your total margin requirement is Rs. 3,00,000. You are required to maintain at least ₹1,50,000 (i.e., 50% of the margin) in cash or approved cash equivalents—such as ledger cash, Liquid Bees, or select debt mutual funds (After deducting the haircut). The remaining Rs. 1,50,000 can be fulfilled through pledged securities or additional cash equivalents .
If your cash or cash equivalent balance is less than Rs. 1,50,000, interest will be charged on the shortfall.
Last updated: 4 Months Ago
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