Cash equivalents are particularly useful for Futures & Options (F&O) traders who want to optimise their capital without holding idle cash. As per SEBI regulations, maintaining a 50:50 ratio between cash or cash equivalents and non-cash collateral is mandatory. Using cash equivalents helps you comply with this rule without depositing actual cash.
The exchanges approve several securities and mutual funds as cash-equivalent instruments. These include:
To view the complete list of approved securities and mutual funds, along with their applicable haircuts and margin benefits, refer to the FYERS cash equivalent list.
Suppose you hold Liquidbees worth ₹10 lakhs but do not have any free cash. You can pledge your Liquidbees to obtain margin for trading Index Futures. Even though a haircut of approximately 10% is applied, you may still receive around ₹9 lakhs as usable margin without depositing fresh funds.
| Scenario | Explanation |
|---|---|
| Pure Cash | If you hold ₹1,50,000 in cash, it gives you margin access but does not provide passive returns. This is simple but may not be capital-efficient. |
| Equity + Cash | If you invest ₹1,00,000 in equities and hold ₹50,000 in cash, pledging equities may provide ₹80,000 post-haircut. Your tradable margin becomes ₹1,30,000. However, since the 50% cash requirement must be maintained, you may be able to use only up to ₹1,00,000 without triggering a margin shortfall. |
| Equity + G-Secs | If you split funds between equities and G-Secs, you may receive ₹60,000 from equities and ₹67,500 from G-Secs after the applicable haircut. Since G-Secs are treated as cash equivalents, you are not required to maintain separate cash for that portion, allowing smoother margin usage. |
| Fully in G-Secs | If you invest ₹1,40,000 in G-Secs and pledge them, you may receive ₹1,26,000 as margin after the applicable haircut. Since this margin comes from cash-equivalent instruments, the amount can be used as cash margin, and you may continue earning interest on your G-Secs. |
Margin requirement is calculated based on the highest margin utilised during the day, as per the exchange snapshot for the NSE F&O segment.
If your cash or cash-equivalent margin falls below 50% of the total margin used, interest at 15% per annum will be charged on the shortfall.
| Scenario | Solution |
|---|---|
| I pledged stocks, but still got charged interest | Check if at least 50% of your margin is maintained in cash or cash-equivalent instruments. Pledged holdings alone do not meet the 50:50 requirement. |
| I do not have enough cash to meet the 50% requirement | Add funds to your ledger or pledge approved cash-equivalent instruments to cover the shortfall. Until the shortfall is covered, 15% annual interest may apply on the deficit. |
| I unpledged some holdings and now got charged interest | Unpledging reduces your available collateral. If the cash or cash-equivalent ratio falls below 50%, interest may start applying on the shortfall. Monitor your margin regularly. |
| I want to avoid recurring interest charges | Maintain at least 50% of your margin requirement in cash or approved cash-equivalent instruments. Use the Margin Statement to track your cash and non-cash collateral breakdown. |
Last updated: 18 Jun 2026