Collateral margin refers to the margin funds that are made available to you based on the securities you have pledged from your demat account, such as stocks, ETFs, mutual funds, or bonds, instead of using cash.
Alice Blue permits the pledging of approved equities, ETFs, and mutual funds to obtain collateral margin. Clients are required to maintain a cash component while utilizing collateral margin. Haircuts are applied based on the asset’s risk (Value at Risk, or VaR), and margin is granted accordingly by Alice Blue Financial Services.
Yes, the client can use collateral margin for all segments; however, the client cannot use the collateral for purchasing new stocks.
Collateral value depends on the “Value at Risk (VaR IN %)”.
Suppose you want to pledge 100 Quantity of Reliance Industries Limited Shares at Rs. 2085/- and the VaR IN% % is 18.70 %.
The amount of Rs. 389.90 (Rs. 2085 * 18.70 %) will be blocked.
The remaining amount, i.e,. Rs. 1695.1 Per Share (Rs. 2085 – Rs. 389.90) will be available as collateral margin.
So if you want to pledge 100 Quantity of Reliance Industries Limited Shares, you will get a collateral margin of Rs. 169510 (100*1695.1).
Here’s how you can check the VaR IN% % of any stock:
Visit nseindia.com, type the name of the company in the search ba,r and hit enter.
Scroll down to the ‘Market Depth – Order Book’ Section, and you will be able to find VaR IN % of the stock
