Understanding the Cash Component at FYERS

What are cash equivalents at FYERS and how can I use them?

Cash equivalents are highly liquid instruments that are accepted as margin when pledged, and are treated the same as cash for meeting trading margin requirements. These assets allow traders to free up capital for trades while continuing to earn returns like interest or dividends.

Cash equivalents are particularly useful for Futures & Options (F&O) traders who want to optimize 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.

Which instruments are considered cash equivalents?

The exchanges approve over 350 securities and mutual funds as cash-equivalent instruments. These include:

  • Liquid mutual funds
  • Government securities (G-Secs)
  • Treasury bills
  • ETFs like Liquidbees
  • Money market instruments

To see the full list of approved securities and mutual funds, refer to the FYERS cash equivalent list.

Why use cash equivalents as margin?

  • Regulatory compliance: Pledged cash equivalents count toward the 50% cash component required by SEBI for F&O margin usage.
  • Dual benefits: These instruments continue to earn returns (interest/dividends) even while pledged.
  • Liquidity: Most cash-equivalent instruments are easily redeemable or unpledged when needed.
  • Reduced need for fresh cash: You can trade in the derivatives segment without needing to deposit additional funds.

Example: Pledging Liquidbees for F&O trading

Suppose you hold Liquidbees worth ₹10 lakhs but don’t have any free cash. You can pledge your Liquidbees to obtain a margin for trading Index Futures. Even though a haircut of approximately 10% is applied, you still receive ₹9 lakhs as usable margin—without depositing any fresh funds.

How do cash equivalents work in different scenarios?

Scenario 1: Pure Cash (No Pledging)
You hold ₹1,50,000 in cash. This gives you margin access but no passive returns. It's simple but not capital-efficient.

Scenario 2: Equity + Cash
You invest ₹1,00,000 in equities and hold ₹50,000 in cash. After pledging equities (₹80,000 post-haircut), your tradable margin becomes ₹1,30,000. However, SEBI rules require 50% in cash—so you can trade only up to ₹1,00,000 without triggering a margin shortfall.

Scenario 3: Equity + G-Secs
You split funds between equities and G-Secs, getting ₹60,000 from equities and ₹67,500 from G-Secs (post-haircut). Since G-Secs are treated as cash equivalents, you're not required to maintain separate cash—giving you seamless access to the ₹1,27,500 margin.

Scenario 4: Fully in G-Secs
Investing ₹1,40,000 in G-Secs and pledging them gives you ₹1,26,000 margin. As this is entirely from cash equivalents, the entire amount can be used as cash margin. You also continue earning interest on your G-Secs.

If your cash or cash-equivalent margin falls below 50% of the total margin used, a 15% annual interest will be charged on the shortfall.

Tips for Using Cash Equivalents

Check the updated list of approved cash-equivalent securities on FYERS. Plan your pledging strategy to balance liquidity, margin efficiency, and income generation.

What if?

ScenarioWhat you can do
I pledged stocks but still got charged interestCheck if at least 50% of your margin is in cash or cash-equivalent. Pledged holdings alone don't meet the SEBI 50:50 requirement.
I don’t have enough cash to meet the 50% requirementAdd funds to your ledger to cover the shortfall. Until you do, 15% annual interest will apply on the deficit.
I unpledged some holdings and now got charged interestUnpledging reduces your non-cash collateral. If cash ratio falls below 50%, interest starts applying on the shortfall. Monitor regularly.
How do I avoid recurring interest charges?Maintain at least 50% of your margin requirement in cash. Use the “Margin Statement” to track your cash vs non-cash breakdown.

Last updated: 12 Sep 2025

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