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 0.0438% per day.
Here’s how you can pledge shares on Dhan
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.