Credit for Sale (CFS) allows traders to utilise the proceeds from selling stocks on the trade day itself, even before the trade is settled. However, there are specific scenarios where CFS can be disallowed:
1. Repurchasing the Same Stock on the Same Day: If you attempt to use CFS to buy back the same stock on the same day, it may be disallowed. This is because such transactions can lead to peak margin shortfalls if there isn't sufficient balance in your account.
2. Margin shortfalls: Utilising CFS for new trades that result in peak margin shortages can lead to the disallowance of CFS. In such cases, future CFS might be blocked to prevent penalties.
It's essential to maintain adequate funds in your account to meet margin requirements and avoid potential penalties.