As per regulatory directives, the margin benefit available against non-cash securities cannot exceed the total margin benefit available against cash and cash equivalents.
Let’s understand through an example:
| A. | Total cash and cash equivalents | ₹100 |
| Total haircut value of non-cash securities | ₹80 | |
| Total margin available to the client for trading purposes | ₹180 (₹100+80) | |
| (In this case, the client is eligible to receive the full margin benefit of non-cash securities as a higher margin benefit against cash and cash equivalents is available to him) | ||
| B. | Total cash and cash equivalents | ₹100 |
| Total haircut value of non-cash securities | ₹150 | |
| Total margin available to the client for trading purposes | ₹200 (₹100+100) | |
| (In this case, the client shall be eligible to receive a margin benefit of only ₹100 against non-cash securities as the margin benefit available to him against cash and cash equivalents is ₹100 only) | ||
| C. | Total cash and cash equivalents | ₹0 |
| Total haircut value of non-cash securities | ₹200 | |
| Total margin available to the client for trading purposes | ₹0 | |
| (In this case, the client shall not be eligible to receive any margin benefit against non-cash securities as the margin benefit available to him against cash and cash equivalents is nil) |