How to Pledge Shares for Collateral Margin

With a new margin rules set by SEBI in the last month, still there is a confusion between investors regarding pledge shares for collateral margin. Earlier the stockbrokers used to set up a margin limit by default as per the stock holdings of the client. To make limits available for clients here stockbroker used to keep clients stocks at broker pool or beneficiary account.

To be a practical keeping your paid stocks at brokers beneficiary’s or pool account for leverage open doors for fraudulent activity. Recently a malpractice done by few veteran stockbrokers like Karvy stockbroking etc. Keeping this in view, SEBI has decided to remove pool or beneficiary account completely from the system for collateral margin.

As per SEBI, client full paid shares cannot be kept in stockbroker beneficiary account for collateral margin. To get extra margin limit, the client need to pledge shares in order to get collateral margin and pledged shares would be hold in client DP not in stockbrokers pool account. These strong initiative by SEBI is for safeguard of investors from future misdeeds for their paid shares. So, share margin pledge to avail limits has been mandate for all from September 2020 last month. The best highlights for margin pledge request is that the shares would be in clients demat account. But a few questions has been arise by investors is that what is the procedure to pledge shares by themselves from respective Depository Participant (DP). So let start discussion below.

How to Pledge Shares for Collateral Margin

At first investors need to check their DP share holdings. The share which are in the form of demat can only be pledge for extra trade limit. Check your DP & Client ID, whether the account has been opened in CDSL or NSDL. Both the depository participant has a different links for share pledge request. Click here for CDSL Margin Pledge Link and for NSDL Margin Pledge Link . To pledge share you need to input pan details or DP ID & Client ID (Demat Account No), click submit – one OTP will come to the registered mobile no, verify the OTP. Once the OTP has been verified, it’s time to select the shares and pledge it directly by your end. The registered DP might take 2-3 hours to confirm share pledge request. Once the DP (Depository Participant) had confirmed the pledge shares request, your registered stockbroker will set margin as per the share haircut.

In case you want to unpledge share, just drop a mail to your stockbroker requesting to unpledge the shares. Please note unpledging shares can bring you out from availing collateral margin limits. On the other hand during the time of stock sell an additional of 20% margin will be required everytime to avoid penalty.

admin

Hi i am Samiran Debnath Admin of this website. I am Financial Advisor by profession build client portfolio in stock market and Mutual Fund. I help people to dematerilise physical shares into electronic mode opening demat account. Help clients to choose best insurance policy for them. I love sharing my views on stock market and the benefits investing in SIP and Mutual Funds.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *

14 + eleven =