To reduce the risk on the financial market and curb the practice of excessive leverage, SEBI has come up with new margin norms. The regulation mainly consists of new pledging and margin rules for stocks and F&O trading on BSE, NSE, and MCX, which will be applicable with effect from 1st Sep 2020. Get the complete details about Zerodha margin pledging system including charges, benefits, and more.
Till now, whenever you pledge your stocks as collateral securities, they move from your Demat account to the broker and in turn to the clearing corporation. But from Sept 1, 2020, the stock will continue to remain in your Demat account and can be directly pledged to the clearing corporation. For this, the broker has to open a separate Demat account labeling ‘TMCM – Client Securities Margin Pledge Account’ (TMCM stands for Trading Member Clearing Member). Then the broker can re-pledges these securities in favor of the Clearing Corporation and obtains margins.
Zerodha has kept the process unchanged on a large basis but has added a few more steps in which the client is required to authorize the pledge by entering an OTP on CDSL’s website, just like the TPIN based pre-authorization for selling stocks. The investors will be sent a link on their emails where they need to enter OTP and authorize the pledge. The full process is explained below:
The fee of pledging will remain the same, which means ₹30 plus GST per pledge. This is because there’s a cost levied by the depository to create the pledge and re-pledge. Some other bunch of changes taking place after levying new margin policy is:
The company will debit shares as soon as you sell them from your demat account and make an early Payin to the exchange on the day it is sold. By this, you can use the full value of sale proceeds from your stock holdings as soon as you exit them to enter new positions in stocks and F&O.
You can sell the T1 holdings (stocks bought the previous day and yet to be credited to your Demat) and use the entire sale proceeds to hold a new position. In F&O, you will be able to use only 60% of the selling value.
Currently, traders can use intraday realized profits for taking new positions on the same trading day. But from now onwards, traders will be able to use it only after 2 days in case of equity/stocks and the next day in case of F&O.
When you will exit option positions, and enter new options, the credit of option premium can be used for only new long/buy option trades on the same trading day and only within the same segment. Traders can use this credit for other types of trades only from the next trading day.
Last updated on 7th May 2021
Pledging facility is provided by Zerodha to its clientele base to provide them collateral margins. Customers can anytime unpledge their shares through following the below steps;
Note: All the unpledging requests placed before 2 PM will be processed next day means whereas if you have placed request after 2 PM then it will be within T+2 days.