Margin Against Shares or pledging a stock is a loan towards shares in your demat account as margin money to trade in Futures and/or 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 defined by each broker, so you have to check with your broker what scheme he is providing against MAS.
Key points to know are:
|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|
|Upstox||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|
With MAS, you can use your long term investment as cash value for day to day trading of course with some limitations. Please read the complete brochure for more information and details of charges, cash vs collateral ratio and list of securities.
Last updated on 30th Jul 2019
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, the value of his pledged request will be
If applicable haircut on pledged request is 25%, that means Rs 25,000 brokers keep for risk cover and release 75,000 for collateral margin. This amount will show as collateral value in your account.
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 does not 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 does not allow to trade.
Yes, the margin given will change everyday based on the value of collateral.
Usually not, but you can further check with your broker.
If the client is requesting for collateral margin, there is some cutoff time for each broker, if your request arrives before that time you will get the collateral margin in T+1 day. Like Zerodha its 4:00 PM, RKSV its 3:00 PM. After pledge process, relevant stock will be debited from the account until unpledged.
It will take T+1 day after unpledged request before cut off time with a broker. For Zerodha its 2:00 PM, for Upstox its 3:00 PM.