Posted on 5th May 2016
Margin Against Shares or pledging a stock is a loan towards shares in your demat account as margin money to trade in future and intraday. If you have shares in your demat account, your money is locked till you sell the shares, you can pledge these stocks to get trading margins for F&O or Intraday trades.
When you request MAS, there are specific rules define by each broker, so you have to check with your broker what scheme he is providing against MAS.
Key points to know are:
How MAS actually works? How much fund will be available for trading?Lets take an example:
Client at a certain broker holding following securities in his demat account:
If he wants to pledge 1000 Share of YYY which are trading @100 Rs per share in order to take a position in NIFTY future, value of his pledged request will be
If applicable haircut on pledged request is 25% that means Rs 25,000 broker keep for risk cover and release 75,000 for collateral margin. This amount will show as collateral value in your account.
How to use MAS fund?
Assume client want to invest in 3 lots of NIFTY future which require Rs 136,000. As per broker cash to collateral ration 50:50, Rs 68,000 can be used from collateral value and Rs 68,000 is required as cash in your account.
If client doesn't have enough cash, then either the order may not execute or the broker is going to charge interest per day for the debit balance in your account. Some brokers provide debit balance with interest and some brokers doesn't allow to trade.
What if I incur losses in trading using my collateral margin?
Does the value of the collateral varies everyday based on the underlying value of the pledged holdings?
Can I pledge bank fixed deposits / RBI t-bills / govt. securities / bonds also?
How to get collateral money in your account?
How much time if will take to get collateral margin for trade?
How much time it will take to get stock back in demat account or after unpledge?
|Cash:Collateral - Ratio||Short Case
(Not able to have 50% cash)
|pledge/Unpledge Request||Collateral margin
request cutoff time
|Unpledge Request Cutoff time||Fund or Stock availability|
|RKSV||By Script or 25%
whichever is higher
|Rs 50||50:50||Not allowed - Order Reject||By Email||3:00 PM||3:00 PM||T+1|
|Zerodha||By Script||Rs 60||50:50||Allowe order with 0.05% Intrest PD on debit amount.||By Email||4:00 PM||2:00 PM||T+1|
|SAS Online||By Script or 25%
whichever is higher
|Rs 99||25:75||Not allowed - Order Reject||Online||3:00 PM||2:00 PM||T+1|
|TSO||By Script||Rs 60 on Pledge only||40:60(For Intraday)
50:50 (All others)
|Allowe order with 0.05% Intrest PD on debit amount.||Online||4:00 PM||2:00 PM||T+1|
|MyValueTrade||By Script||Min 50 or .02%||Online||4:00 PM||2:00 PM||T+1|
|ICICI Direct||By Script||0.03 % or minimum of Rs. 50/-||Online||4:00 PM||2:00 PM||T+1|
|Sharekhan||By Script||0.02% or Rs.15/- per transaction whichever is higher||4 times||Online||4:00 PM||2:00 PM||T+1|
|Kotak||By Script||0.05% or Rs.30/- per transaction whichever is higher||6 Times||Online||4:00 PM||2:00 PM||T+1|
Conclusion: With MAS, you can use your long term investment as cash value for day to day trading of course with some limitations. Please read complete brochure for more information and details of charges, cash vs collateral ratio and list of securities.
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