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. How Will Zerodha Process the pledging requests? Earlier, the broker is required to voluntarily transfer these benefits to the investor, but many investors miss out on claiming such credits when brokers don’t transfer, so this problem will not occur in the new pledging policy. But from now, clients held all the securities and they will receive dividends, bonus, rights, etc. Corporate actions allowed: In current policy, the stocks are held by brokers and they are the recipient of all cash and non-cash corporate actions like dividends, bonus, rights, etc.This will cover the risk from market movements in the stocks you’ve pledged.
Facility to sell pledged stocks: In the new Pledging policy, investors are allowed to sell pledged stocks without having to request for unpledged and wait until they are received to your demat account.But from Sept 01, 2020, all the instruments held in the client’s account will be accepted for the pledge. Pledge all approved securities: Zerodha and other brokers do not accept the pledge of all securities which are allowed by exchanges.Also, one client’s stocks cannot be pledged to provide margin to another client. No securities misuse: As the securities will not leave the Demat account of investors, there are fewer chances of it being misused.Then the broker can re-pledges these securities in favor of the Clearing Corporation and obtains margins. 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). But from Sept 1, 2020, the stock will continue to remain in your Demat account and can be directly pledged to the clearing corporation. 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. Get the complete details about Zerodha margin pledging system including charges, benefits, and more. 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 1 st Sep 2020. To reduce the risk on the financial market and curb the practice of excessive leverage, SEBI has come up with new margin norms.
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