Margin Pledge - Effect from 1st September, 2020

‼ Important Notice ‼
1. What is the circular all about?
The circular says that the Power of Attorney (POA) can no longer be used to provide margin against
securities. So brokers cannot utilise the POA as consent of customers to provide margin against securities in
their DP account. To receive margin against securities, the customers will now be required to pledge their
securities in favour of the broker.
2. Margin Shortage Penalty will be applicable in CASH segment.
3. For both Intra-day and Delivery trades, UPFRONT Margins ( VAR(Value At Risk) + ELM(Extreme Loss Margin) ) has to be
provided in ADVANCE of trade on both BUY and Sell Side.
4. The shares lying in the Demat account can be provided towards margins by the new 'Margin Pledge
Mechanism'.
5. Ensure to maintain sufficient margin in the account before all the transactions otherwise the penalty will be
applicable.
6. Illiquid securities and securities having 100% VAR(Value At Risk), cannot be accepted for Margin pledge and No
exposure/limits will be granted.
7. Buying and selling of shares will require Upfront margin from now onwards .
Eg: If we want to buy Company 'A' shares worth Rs. 1 Lakh, we must have Rs. 20K in the account as cash and
balance money needs to be paid within 2 days.

Major Change:
If we want to sell Rs. 1 Lakh worth of Company 'A' shares from the holdings for that scenario also we must
have minimum Rs. 20K in the account, failing which penalties will be levied.
Note:
Selling from holding will also require Upfront margin in cash ( VAR(Value At Risk) + ELM(Extreme Loss Margin) )
You can keep extra cash / or can pledge other holdings for the stipulated margin required.

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8. Shares bought today cannot be sold Tomorrow.
Note: BTST(Buy Today Sell Tomorrow) Closed.
Eg: We bought Company 'A' shares On Monday.
We can only sell those shares after receiving the delivery of shares on Wednesday, i.e. the T+2(Transaction +
2 Days). We can only sell the shares after we receive it in our DP / only after receiving the delivery of shares.

9. Shares sold today from delivery, the funds cannot be used for new trades today. You can use the funds for
new trades the next day.

Eg: We sold Rs. 10K worth of Company 'A' shares today.

We cannot use this money to buy fresh shares of other companies. This 10k will be cleared the next day,
then you can use the money next day.

No changes In options and Futures Rules for Now Till further Notice.

10. Margin Shortage Penalty:

 Shortfall of less than Rs. 1 Lakh and less than 10% of the applicable margin =0.5% (penalty)
 Shortfall of over Rs. 1 Lakh or more than 10% of applicable margin = 1%(penalty)
 If there is a margin shortfall continues for more than 3 consecutive days, there will be a 5% penalty from
the 4th day.
 If there is a margin shortfall continues for more than 5 days in a month, there will be a 5% penalty from
the 6th day.

11. The pledge charge is Rs.30/- per ISIN number.

(Note: Investors with a Long-term perspective to accumulate quality assets or those delivery based
kind of transactions by any investors will not be impacted much by this change. It is wholly aimed at
curtailing the speculative kind of transactions to protect the interest of the investors)

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