Published Oct 17, 2024
From Sep 1st, 2020 as per SEBI Circular all collateral and funded stock can only be held by way of margin pledge.
How to pledge shares to avail collateral as per new margin pledge mechanism
Once you buy shares in NRML under Equity Plus, as per the circular, both collateral stock and funded stock will need to be held by way of margin pledge in your DP account. The fully paid shares will be considered collateral stock, and the value of shares equal to the debit amount will be considered funded stock.
For example, if you fund your account with 1 lakh and buy shares worth 4 lakh under Equity Plus, 1 lakh worth of fully paid shares will be marked under Collateral Pledge, and 3 lakh worth of shares will be marked under MTF Pledge.
We will initiate two pledge requests from our end—one for collateral stock and the other for funded stock. You will be required to approve the same via OTP mechanism. Please note, once shares are purchased under MTF, we will initiate the pledge requests on T-day itself, and they must be approved. Failure to approve will result in restricted buying in your account from T+3, and we will be required to liquidate your funded stock as per SEBI norms by T+5, post 2:30 PM.
Additionally, to receive delivery limits in your account under EQ+, you will need to approve pledge requests for collateral stock bought in your account, even though your account may be in credit.
Example: You transfer ₹5 lac to your trading account and buy delivery worth ₹5 lac. We will mark this ₹5 lac as collateral stock, even though your account is not in a negative balance, and send you a pledge request. This will open your delivery limit, allowing you to buy delivery up to 4 times the total amount, which in this case would be up to ₹20 lac.
If you do not approve the pledge request, you will not be able to buy further delivery in your account, as the limit will be reduced to zero.
Risk Square-off: If the market value of your portfolio decreases, additional margin may be required. If the Equity Plus Actual Cash vs Share % falls below 20%, you will need to either deposit more funds or reduce your holdings in Equity Plus. South Asian Stocks Ltd reserves the right to liquidate positions without notice if the cash-to-share ratio goes below 20%.
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South Asian Stocks Ltd. : NSE Member Code 09073, BSE Member Code 6329, MCX Member Code : 55215 , NCDEX Member Code : 1233 NSDL : IN-DP-474-2020 . SEBI Registration No. INZ000164738
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