Some things to know before dealing with Liquidbees in small / retail quantities.
- Liquidbees dividends get credited as additional liquidbees units to your demat account and not as cash credits to your bank account like with equity dividends.
When buying Liquidbees using small funds as a retail investor, you start receiving fractional units of Liquidbees as dividends in your demat account, units like .001 of Liquidbees. However, your trading account allows you to buy and sell Liquidbees instrument only in whole units. You cannot redeem these fractional units received as dividends using your trading account. Redeeming these fractional units that are credited to your demat account received as dividends is a cumbersome and inconvenient procedure. To redeem these decimal / fractional units credited to your demat account as dividends, you will have to undertake a very long and inconvenient offline form filling process.
- Liquidbees is a very liquid instrument, but the possibility of short delivery exists.
Here is a situation, where you decided to park all your excess funds in Liquidbees on Monday. However on Tuesday you see an opportunity arising in equity, so you decide to sell the Liquidbees which is now on T+1 and use this margin on receivables to buy fresh equity. Now, suppose your Liquidbees buy order on Monday runs into a short delivery, your trading account on Wednesday is now in a large negative balance for which the broker will start charging you Short Margin Penalty Charges of 1% each day. You have to wait until your short delivered Liquidbees purchase on Monday is sent for auction, the units which then gets bought again at the auction and gets credited back to your demat account. It takes some time before you can clear that big negative balance off your brokers ledger, for which they might continue charging Short Margin Penalty Charges.