Fyers is one of the very few brokerages that allowed the clients to use the entire collateral amount for taking positions. However, clients are recommended to maintain a cash balance of 20% to meet their Mark to Market (MTM) requirements.
For Instance, Client ‘X’ has pledged ₹1,00,000 worth of holdings for additional leverage and has a cash balance of ₹50,000. Assuming that the applicable haircut is 10%, the exchange will release a margin of ₹90,000 [i.e., 100000 – (100000*10%)] after the deduction of such haircut. Mr. X can take positions using the whole ₹1,40,000 (90,000+50,000) as he is maintaining the cash in excess of 20%.
Using the above example, let’s say Mr. X had a cash balance of ₹10,000 and he wishes to take positions worth ₹1,00,000. In this case, Mr. X can utilize the entire margin of ₹1,00,000 (90,000+10,000). However, it is recommended for him to maintain a 20% cash of ₹20,000 (1,00,000*20%) to meet the Mark to Market (MTM) needs. Therefore, Mr. X has a margin of ₹10,000 and is required to add an additional margin of ₹10,000.