How-to LiquidBeES Cash-equivalent ETF

How to buy LiquidBeES on Zerodha

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LiquidBeES (Nippon India ETF Liquid BeES, NSE symbol LIQUIDBEES) is a unique ETF that operates as a money-market vehicle. Each unit has approximately Rs 1,000 fixed NAV with daily dividend distributed as additional fractional units. It is the most popular cash-equivalent collateral for F&O margin among Zerodha clients.

Conflict-of-interest disclosure. This guide is published by WebNotes Editorial Team for informational purposes. WebNotes has no commercial relationship with Zerodha or Nippon India MF.

Step-by-step procedure

Five steps per the procedure infobox. The notes below cover the LiquidBeES mechanics and the collateral use case.

How LiquidBeES works

The fund structure:

  • Holds money-market instruments (T-bills, very short-term debt).
  • NAV fixed at approximately Rs 1,000 per unit.
  • Daily dividend in additional fractional units.
  • Unit count grows daily; per-unit NAV stays ~constant.

Effective return: matches Indian money-market yield (~5-6% per annum recent levels).

Why LiquidBeES specifically

For active F&O traders:

LiquidBeES advantageDetail
Cash-equivalent for SEBI 50:50 ruleCounts toward cash component
Low haircut (~10%)Provides Rs 0.9 of collateral per Rs 1 of LiquidBeES
Money-market returnEarns ~5-6% per annum
Daily liquiditySellable on NSE any trading day
In-dematHeld in Zerodha demat; pledgeable

For a trader needing Rs 5 lakh of cash margin who has equity holdings but no spare cash: buy Rs 5.5 lakh of LiquidBeES, pledge it; the haircut-adjusted collateral ~Rs 5 lakh meets the cash requirement while the equity holdings continue earning.

Pledging for collateral

After buying LiquidBeES:

  1. Wait for settlement (T+1; appears in Holdings).
  2. Console > Portfolio > Pledged shares > New pledge.
  3. Select LIQUIDBEES with quantity.
  4. Authorise via depository OTP (CDSL Easiest).
  5. Collateral value appears on Kite funds (after haircut).

The pledged value:

  • Counts toward margin available .
  • Specifically toward the cash component of F&O margin.

Tax treatment

LiquidBeES is taxed as a debt fund :

  • All capital gains at slab rates (per Section 50AA post April 2023).
  • No STCG / LTCG distinction.
  • Daily dividend reinvestment doesn’t create a tax event until you sell.

For complex tax situations, consult a Chartered Accountant before filing.

Settlement

T+1 for the buy. The collateral pledge is operationally same-day to next-day.

When LiquidBeES is appropriate

Use caseLiquidBeES suitability
F&O margin cash componentExcellent
Long-term investmentMarginal (low return vs equity / debt funds)
Idle cash parkingGood (better than savings account)
SIP targetMarginal (better SIP targets exist)

For most retail investors, LiquidBeES is most useful as F&O collateral.

See also

External references

References

  1. Nippon India MF, LiquidBeES scheme information document, nipponindiaim.com.
  2. Zerodha Support, LiquidBeES as F&O collateral, support.zerodha.com.
  3. SEBI, Cash collateral framework for F&O, sebi.gov.in.
  4. Income Tax Act, 1961, section 50AA.

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The WebNotes Editorial Team covers Indian capital markets, payments infrastructure and retail investor procedures. Every article is fact-checked against primary sources, principally SEBI circulars and master directions, NPCI specifications and the official support documentation published by the intermediary in question. Drafts go through a second-pair-of-eyes review and a separate compliance read before publication, and revisions are tracked against the SEBI and NPCI rule changes referenced in the methodology section.

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WebNotes is independent. No relationship with any broker, registrar or bank named in this article.