Short answer

When you pledge securities in your demat account to trade F&O, your withdrawable balance changes based on the collateral margin blocked for your F&O positions and the cash in your account.

At least 50% of the margins blocked for F&O positions have to come in the form of cash or cash equivalent collateral. The other 50% of the margin requirement can come in the form of other non-cash equivalent collateral margins.

Example scenario

You initiate an F&O position requiring ₹1,00,000 margin. Before opening this position, you have:

Cash: ₹70,000

Collateral margin: ₹80,000 from pledged securities (after applying required haircut)

Cash equivalent: ₹20,000 from pledged liquidbees

Here’s how the system allocates your ₹1,00,000 F&O margin:

This calculation leaves you with a withdrawable balance of ₹40,000.

Withdrawable balance formula

The system calculates your withdrawable balance using this formula:

Withdrawable balance = (Available cash balance - Proceeds from stocks sold today - F&O profits today - Funds added today)

Where:

Unsettled credits = Today’s credits in equity segment + Today’s credits in the derivative segment

Collateral utilised = Total collateral used towards margin requirements from cash and non-cash equivalents

If you don’t have enough collateral margins to cover 50% of the blocked margin, the system charges the difference from your available cash balance, which further reduces your withdrawable balance.

Things to keep in mind

Collateral margin from pledged stocks or liquid mutual funds for F&O trading does not count as part of your withdrawable balance.

Funds you add during the day become available for trading immediately. However, you can only withdraw these funds after one day due to end-of-day balance reconciliation requirements.

You can track securities that form part of cash and non-cash components on the approved list by visiting arrow.trade/approved-securities.