Introducing: Pledge Shares for Margin Benefit

Volatile Markets may provide trading opportunities, and at times you do not have enough cash in a trading account (or maybe even limited liquid cash in your bank account) but you see opportunities to trade that you don’t want to miss.

We understand Traders. And we also understand that it’s important for traders, losing a trading opportunity due to a shortage of funds or margins is frustrating. Yesterday we introduced a better way to be informed about the shortage of funds, and today we are introducing one of the most requested features by Traders on Dhan - Pledge Shares for Additional Margin Benefit.

Super traders already know it, and also know why it’s so important. But for those who don’t, well it helps traders pledge their existing portfolio holdings and take advantage of the collateral margin received to trade in Equity Intraday, Futures, and Options.

You get collateral margin against your existing portfolio holdings after a deduction on the gross holding. The deduction is called Haircut (Haircut is the amount that covers for the risk a broker is exposed to if the collateral share prices move erratically)

To explain it in simple terms, let’s understand it:

Assume you have Rs. 1,00,000 in cash in your Dhan trading account and you want to create a position that requires a margin of Rs. 1,50,000. Also, you have holdings whose value is Rs. 3,00,000. Pledging your existing holdings post haircut gives you an additional margin of Rs. 2,40,000 (if the haircut is 20% on your holdings). Haircuts vary as per the category and quality of stocks. Now, the limit available for you becomes Rs. 3,40,000 (Rs. 1,00,000 of Cash Margin and Rs. 2,40,000 lacs of Non-Cash Margin which is after pledging).

In case you have Rs. 50,000 in Cash and you want to create a position that requires a margin of Rs. 1,50,000. Also, you have holdings whose value is Rs. 3,00,000. Pledging your holdings post haircut gives you an additional margin of Rs. 2,40,000 (if the haircut is 20% on your holdings). Again, haircuts vary as per the category and quality of stocks. Now, the limit available for you becomes Rs. 2,90,000 lacs (Rs. 50,000 of Cash Margin and Rs. 2,40,000 of Non-Cash Margin).

Interest Calculation and Rate of Interest:
As per exchange guidelines, for creating F&O positions, out of total margin requirements 50% of the margin can be in cash, and the remaining 50% can be non-cash components (Portfolio Holdings). The shortfall portions of the cash margin funded will attract an interest rate of 0.05% per day.

Can holdings be unpledged?
Oh Yes! You can unpledged your holding of stocks whenever you have exited from your trades and no longer want to avail margin pledge facility.

Can your holdings be unpledged without having to sell them?
Yes, you can do that on Dhan. We take unpledged requests from you and process them over the weekend (after Friday) to ensure that you can avail full benefit of Margin Pledge for the entire trading week.

Are there any charges I need to pay?
A minimal charge of Rs 12.5 + GST per ISIN will be imposed on each pledging request. Charges for un-pledging are also the same.

Where are the stocks, when they pledged?
Things you should know about pledging & unpledging are the stocks remain in your Demat account throughout the duration of the pledge and you are eligible to receive all the corporate actions like dividends, bonuses, etc. in your Demat in this time period.

You will love the simple and seamless pledge and unpledged experience on Dhan. We have made it real-time for the pledge, built in a way that you know the margin benefit upfront, and are also able to sell pledged stocks anytime by regular sell (in-line and no additional unpledged is required for you). More importantly, pledged stocks continue to be in your own Demat account and you will see the full portfolio value (pledged and unpledged).

We are sure you are enjoying the trading experience on Dhan (App, Web, and TradingView), and pledging is going to make this even better. Thinking of moving your existing stocks to Dhan, well that is also possible now - simple and 100% digital, read here on transferring your shares to Dhan.

Enjoy the Dhan experience. As usual with Dhan, your suggestions and feedback are most welcome.

Thank you,

Kiran Upadhyay
Product

5 Likes

Much awaited !

Thnx :pray:

Did already and was super Fast experience ! will ask further doubts when I have it :grinning:

1 Like

Hi @Kiran few doubts

  1. Suppose i go on pledging my Portfolio holding stocks , but i do not use the Margin , it just stays . In this case there is no interest charged right ?

  2. What about NIFTY BEES, BANK BEES , GOLD BEES , heard these are considered as CASH component , please highlight some points on this.

  3. Mutual funds when it arrives on DHAN , :slightly_smiling_face: ELSS can also be similarly pledged right ?

These ETF’s comes under the non-cash component as per the exchange.

1 Like

What about LIQUID BEES @Siddharth

Yes, it’s a cash component.

2 Likes

Will interest be charged for Intraday positions?

Dear Kiran

Thanks for this much needed feature.

Do you guys give margin benefit if we buy and pledge LIQUIDBEES or currently its only limited to shares ?

Just a suggestion: can you guys prepare an excel sheet for cash/non cash component script with hair cut like we see on zerodha.

It will complete this feature in pure sense and benefit us a lot.

Hi @pavz,

Thanks for this wonderful response!! :slightly_smiling_face:

  • So, If you have pledged stock and have not utilized the margin no interest will be charged. Also, Nifty Bees, Bank Bees, Gold Bees are noncash components. We’ll be soon attaching a link (for cash & non-cash components)

Currently, MF is not available on Dhan, So, once we add the same we’ll surely notify you.

Hi @DineshS,

Yes, interest will be charged on margin utilized even on intraday position

Dear @sonu.delhi

Thanks for the message!! :slightly_smiling_face:

Yes, Liquidbees are available in the pledge list. Once you buy a share it can only be pledged after T+2 when it is added to your DP.
Also, agreed on your request we’ll be soon adding the excel sheet for cash and non-cash components

Wow, this is amazing.
Thank you so much for releasing this feature.
One thing which is not very clear to me is that you mentioned that you will take unpledge request and you will only process it over the weekend. I feel this is too long in dynamic situtation since the user might need to sell the pledge holding.

2 Likes

Thanks for introducing the feature.

Some of the competitors are allowing 100% of collateral to be used towards the margin, they take care of the 50% cash component as required by the exchange. See the below for 5paisa PRS Plan.

Any thoughts on allowing 100% collateral to be used against margins?

https://www.5paisa.com/open-demat-account-premium-customers?referralcode=56787898&utm_source=PRsundarpremium&utm_campaign=premiumaccount

This is not a good practice, they use other clients’ funds to give you the remaining 50% margin, they will restrict this soon.

Requirements are for the broker and not for the end of the clients as per the NSE guidelines. That’s the reason different brokers interpret this in different ways. Would like to know how is this done on the Dhan app.

Hi @Saurabh,

Kindly note that you do not need to unpledged stocks in order to sell.

However, Stocks remain in your Demat account throughout the duration of the pledge and you are eligible to receive all the corporate actions like dividends, bonuses, etc. in your Demat in your pledged time period.

We take unpledged requests from you and process them over the weekend (after Friday) to ensure that you can avail full benefit of Margin Pledge for the entire trading week.

Though we have noted your request on not processing the unpledged request over the weekend, and will surely evaluate if we can implement it.

Hi @sk1979,

Welcome to our community!

We are allowing collateral as per our Risk Policy and certain guidelines that SEBI and exchanges have set.

Kindly note that we will be closely evaluating this over the next couple of weeks and any changes, if necessary, will be duly communicated to all our clients. Thank you. :slight_smile:

This is useful when we dont have to unpledge before selling it. Its very convenient !
Thanks for it.

1 Like

Woule like to know this.
For Intraday positions, does 50:50 rule is applied ?

Hi Kiran

Are you guys planning to add money market fund for collateral pledge.
Actually they give better return than liquid bees and are considered cash component aswell.