Your funds statement won’t comprise collateral margins as the collateral margin provided is neither added or removed from the balance in your trading account.
Since the collateral margin isn’t reflected in the funds statement, there will be scenarios in which your ledger will show the debit balance when you have used the collateral margin for taking a position.
Take this example.
Position – Long Nifty Futures
Margin required – Rs. 1,00,000
Opening Balance on Kotak Neo – Rs. 50,000
Collateral (liquid funds) – Rs. 30,000 (cash equivalent)
Collateral (equities) – Rs. 40,000
According to the regulations, 50% of the margins blocked for overnight derivative positions have to come in the form of cash or cash equivalent. The remaining 50% of the margin requirement can come from non-cash equivalent collateral margins, i.e., margins raised from pledging liquid funds.
Component
Opening Balance (Cash)
Available for use
50,000
Used
30,000
Balance
20,000
Component
Cash Equivalent
Available for use
30,000
Used
30,000
Balance
0
Component
Collateral Margin
Available for use
40,000
Used
40,000
Balance
0
Component
Total Margin Collected
Available for use
Used
1,00,000
Balance
| Component | Available for use | Used | Balance |
|---|---|---|---|
| Opening Balance (Cash) | 50,000 | 30,000 | 20,000 |
| Cash Equivalent | 30,000 | 30,000 | 0 |
| Collateral Margin | 40,000 | 40,000 | 0 |
| Total Margin Collected | 1,00,000 |
The withdrawable balance is = Opening Balance – Utilized Amount
= 50,000 – 30,000 = Rs. 20,000/-
Since the collateral margin is not reflected in the funds, the funds statement will show:
Margin required for the position – Cash Available (Opening Balance)
= 1,00,000 – 50,000
= (50,000)
Note: Delayed payment charges won’t be levied on this debit balance of Rs. 50,000.