Margin Pledge serves as a means to amplify margin availability for F&O trading by leveraging securities like Stocks, Mutual Funds, SGBs, and ETFs from your portfolio. However, at present, Upstox exclusively accepts stocks, ETFs, and SGBs for pledging.
For example, if a stock within your portfolio is trading at ₹100 and you decide to pledge it, you can gain a margin of ₹85 specifically for F&O trading. The remaining ₹15, termed as a "haircut," represents the discrepancy between the security's market value and its value after being pledged. This haircut acts as a precautionary measure, accounting for potential market risks or uncertainties.
Important considerations:
- Regulatory guidelines dictate maintaining a 50:50 ratio between Cash and Collateral while pledging securities.
- Effective October 2023, we will introduce a provision allowing 100% collateral without obligating adherence to this ratio. A nominal interest of 0.05% per day on the cash margin shortage, according to the 50:50 cash collateral ratio, will be applicable.
- Collateral margin usage extends to both purchasing and selling Futures, as well as Options uying & selling (writing).
- Access the list of available securities for pledging by logging to your upstox app using your 6-digit PIN or biometrics, go to 'Account' > 'Actions' > 'Margin Pledge'.
- You will continue to enjoy benefits from corporate actions such as bonuses, dividends, splits, and other entitlements.
Related articles
How to pledge shares(via Mobile application)?