NEW MPR (Margin Pledge and Re-pledge) Framework FAQ

1. What was the old system of margin?

A client who had PoA was given exposure against his existing DP holdings. The client would keep his shares in his own DP, and we in turn would give buying power. If required, at the End of day risk management would transfer shares to pool account or sell the position based on margin requirement using PoA.

2. What is the new system of margin?

In the new system, approved securities in the client’s holdings can be marked as lien (pledged) in favour of Geojit and in turn the client will get buying power based on the market value after applying defined haircut.

• While doing so, client is also giving consent to re-pledge the same to clearing corporation for availing margin

• The advantage of this system is that the shares remain in the customer’s Beneficiary Account and benefit of all corporate actions will be directly credited to the customer’s DP account or bank account  

3. How can a client pledge his/her shares for margin?

There are 2 steps involved in pledging securities to Geojit:

1. Client gives Request(Scrip, quantity to be pledged)
2. Client gives Confirmation (Input PAN, get the OTP, Confirm with OTP)

Once DP gets confirmation message from respective depositories, pledge will be marked.

4. How can a client request for pledge/ un-pledge?

Client can request for pledge/ unpledged in the following ways:

1. Selfie (online trading portal or mobile application)
2. Customer care site (GCC)
3. Call customer care
4. Call branch
5. Physical form

Please note for selling you don’t require to unpledged, you can sell the shares and Geojit will release the pledge and give Pay-in to the exchanges.

5. How does the pledge system work?

One can give full quantity or partial quantity to pledge. Such requests are validated against approved instruments (shares) and available quantity and sent to Depository Systems. Depository Systems in turn send a link to the registered mobile and email of the client. As of now, maximum time taken for sending the link to the customers is 60 to 70 minutes.  Once the request is accepted by the Depository (NSDL/CDSL) Systems, an email and SMS is triggered to the clients registered email id and mobile. A sample of the email/ SMS is given below:

“Dear Investor, your DP GEOJIT FINANCIAL SERVICES LIMITED has initiated margin pledge from your NSDL demat account INxxxxxx xxxxxxxx. You may confirm the same by clicking on https://eservices.nsdl.com/xxxxxxxxxxxxxx”

6. What is the validity period of the link?

The link is valid till the end of business day of the Depository services. Business day is defined as BoD (Beginning of Day) to EoD (End of Day) on working days. For example, if a request is given at 4:30 PM on a working day then the validity of the link is till the EoD process of Depository Services (NSDL/CDSL).

7. What happens when I click on the link?

On clicking the link, NSDL/CDSL eServices will open and you will be prompted to enter your PAN. Key in the PAN and check the instruments and quantity selected for pledge. All approved instruments can be confirmed with one click on the check box “All” or client can select the instruments and confirm.

There are 4 things to be done in the eServices window:

1. Enter the PAN
2. Click the button – ‘I am not a robot’
3. Selection of Instruments

After you submit these details, an OTP is triggered

1. Enter the OTP

8. What is the validity period of the OTP?

Once OTP is triggered, validity of OTP is for 5 minutes.

9. What is the difference between link validity and OTP validity?

The link sent by NSDL/CDSL is valid till end of Business day of Depositories. The OTP is valid only for 5 minutes.

10. How can I resolve the issues with UCC?

Login to IDeAS portal of NSDL or Easiest of CDSL, to pledge the shares. Once UCC is updated you can use the links of customer care for pledging.

11. What is the Physical Process and when should it be used?

The physical process should be used in the following cases:

1. If the client does not have email and mobile (irrespective of whether he has PoA or not)
2. If the client does not have PoA and he is unable to pledge/unpledge through Selfie or Customer Care portal or through IDeAS/ EASIEST

12. Can I pledge through branch or by calling customer care?

If you do not have PoA, then you cannot pledge/ unpledge through branch or by calling customer care. You can either use Selfie, Customer Care portal, IDeAS/Easiest or physical form.

13. Can I use NSDL/CDSL mobile and web applications?

Yes, margin pledge is available in these applications. If you have already registered for IDeAS or EASIEST you can use the facility to pledge.

14. How are unpledge instructions executed?

• Once shares are pledged, customers can request to un-pledge the shares through customer care portal, Selfie mobile /web, Call Centre, branches or physical forms
• Unpledge does not require OTP
• Unpledge instructions will be validated against buying power utilisation and on validating with RMS, the instruction will be sent to Depositories to unpledge
• Unpledge can be done partially as well
• Confirmation time window is the same as that of the Pledge Process

15. What is repledge?

Securities that are pledged to Clearing Member can be repledged to Clearing Corporation (CC) if required. Please note that only CC approved securities can be repledged.

16. With the introduction of Pledge Margin, what are the changes in the Cash Segment

100% ordervalue is required as margin either by ledger balance or Equivalent Pledge value after hair cut. Selling from demat holding with POA is also considered as margin for subsequent trades of the client subject to Early Pay in being made on the same day to Exchange . Geojit will pull the shares from DP on T day and give early pay-in to exchanges.

17. With the introduction of Pledge Margin, what are the changes in Equity Intraday?

50% VAR(Value at Risk) margin on  order value for NIFTY stocks subject to min 10% or 20% or exchange margin whichever is lower  is required as margin either by ledger balance  or  Equivalent Pledge value after hair cut. Selling from demat holding with POA is also considered as margin for subsequent trades of the client subject to early pay-in being made on the same day to Exchange.

18. With the introduction of Pledge Margin, what are the changes in Equity & Currency Derivatives?

100 % SPAN + Exposure (Actual Exchange Margin) margin on order value is required either by ledger balance or Equivalent Pledge value after hair cut. Selling from demat holding with POA is also considered as margin for subsequent trades of the client subject to early pay-in being made on the same day to Exchange.

19. With the introduction of Pledge Margin, what are the changes in F&O Intraday?

50% SPAN margin on order value is required either by ledger balance or Equivalent Pledge value after haircut. Selling from demat holding with POA is also considered as margin for subsequent trades of the client subject to early pay-in being made on the same day to Exchange.

20. With the introduction of Pledge Margin, what are the changes in Commodity Derivative?

100 % SPAN + Exposure (Actual Exchange Margin)   margin on order value   is required either by ledger balance or Equivalent Pledge value after hair cut. Selling from demat holding with POA is also considered as margin for subsequent trades of the client subject to Early Pay in being made on the same day to Exchange.

21. What will happen to BTST? 

You can keep the positions as BTST only on the trading day . From T+1 onwards these shares are converted to cash in Selfie terminals.  After T+2 if the payment is cleared shares will be moved to Client DP a/c or else it will be kept in CUSA (Client Unpaid securities account) till CUSA clearance day.

* a) Margins mentioned here are the buy margins only. However for the order to be accepted, you need to have margin requirement x 2, so in the above example it will be 10000

b) Since there is shortage in reporting, further exposures cannot be allowed. However you can maintain this position till CUSA clearance.  Once you sell the share after settlement (T+2) we can give the early pay-in to the exchanges and permit further exposures.

c) Margin reporting arrived is only  based on Execution rates & so violation due to M to M or due to other margins is not mentioned here  Read more.

22. Can I get exposure against my selling on T day? Do I need margin for selling my shares? Can I get the exposure against my previous day selling on T+1 day? 

Please look at the table below to understand various scenarios under which exposure will be given.

23. Is there any margin required for selling my demat holdings with Geojit? 

No, subject to clients having signed the POA with us.  In such cases we can take the shares from demat account on T day itself and can give EPN (early pay-in) to Exchange to avoid the margin requirement for selling the shares.

24. In case there is shortage of margin against the positions taken against my pledged shares, and I am holding enough shares in my beneficiary demat account without any pledge to cover the shortage, what will happen to the positions?

Positions will be cleared after margin call if there is no payment /further pledge. Shares held in beneficiary account will not be considered as margin if it is not in pledged status.

25. Is pledge applicable in MTF segment for availing exposure against holdings?

Yes. The shares need to be pledged in favour of Geojit Financial Services Ltd. – Client Securities Margin pledge account (CSMPA). Here also, the shares used as collateral will be reflected as pledged towards MTF collaterals in Beneficiary account of the client.

26. Can we report M to M loss based on pledge shares? 

MTM can be reported only in equity & equity derivatives by form of pledge. Commodities MTM has to be reported in the form of cash.

27. Can I utilise my intraday profit for taking fresh positions? 

No, with these new changes you cannot utilise intraday profits for taking fresh positions.

28. Where can I see the list of shares and quantity that has been pledged?

You can check through Selfie as well as GCC.   In GCC your demat holdings will show in pledged status & in Selfie portfolio you can see the pledged quantity column.

29. What will be the exposure for NRE-PIS accounts?

Exposure will be based on PIS funds available in PIS banks. Pledge cannot be allowed for such accounts.  Pay-in needs to be cleared within T+2. Buying against sell positions will not be permitted till T+2.

30. Can I sell the pledged shares?

Yes you will be permitted to sell the shares subject to maintaining sufficient margins.

31. Whether interest is applicable if I have pledged/ re-pledged the shares and taken position in F&O?

Penalty is applicable based on the ledger balance.  50:50 is required to avoid penalty (50% cash and 50 % security, after applicable haircut, is required for getting the margin benefit as per Exchange).

32. How long can clients maintain pledge?

There are no restrictions applied.

33. Can PMS shares be pledged?

No, PMS shares cannot be pledged.

34. Can I pledge shares bought in smart folios?

Yes, these shares are like any other shares lying in the demat account.

35. Why is Error message showing: – can’t process pledge and we will get back to you with details’ in some cases.

This is due to failure in UCC upload at depository. A one-time visit and pledging from IDeAS (NSDL) or Easiest (CDSL) will resolve the issue.

36. I am able to send request to pledge my shares but I’m not getting any SMS/email from Depository. What should I do?

There could be multiple reasons for this – please check with DP whether the correct email id and mobile number has been updated in the DP system. If this is not the issue, it is possible that the UCC may not be uploaded with Depository.

37. How can I modify the phone numbers/email id registered with DP?

Visit the customer care of Geojit, in the KYC page there are provisions to change the Phone numbers/Email.

38. In case of any queries whom should I contact?

Please contact our customer care toll free numbers 1800 425 5501/ 1800 103 5501 or write to us at customercare@geojit.com