Question 1

What is Pledge Shares?

Accepted Answer

Pledge Shares is a facility where you can pledge your existing shares with the broker and in return, the broker will give you capital to trade or invest in the stock market.

Question 2

How does Pledge Shares work?

Accepted Answer

Say you want to take an intraday position worth ₹1 lakh but you only have ₹50,000 in your trading account. You need another ₹50,000 to place this order. Now assuming you have shares worth ₹70,000 in your Demat account, you can pledge them and get additional margin for trading. In this case, assuming a 20% haircut, you will get ₹56,000 as collateral margin helping you place your desired intraday order.

Question 3

In which segments can I avail Pledge Shares?

Accepted Answer

Pledge Shares is available in Intraday, Futures & Options(writing/selling only), across all segments – equity and currency. You can even use margins received under Pledge Shares and take fresh positions under Pay Later (MTF) and enjoy unlimited holding period. Know how you can trade with zero capital.

Question 4

What interest rate does m.Stock charge on Pledge Shares?

Accepted Answer

m.Stock does not charge any interest to avail margin with Pledge Shares for Intraday trades. For F&O trades, the interest is ZERO unless there is a margin shortfall. In case of a margin shortfall, an interest of just 0.0274% per day, is charged.

Question 5

How much interest is charged on Pledge Shares?

Accepted Answer

m.Stock charges 9.99% p.a. interest on Pledge Shares, which is one of the lowest in the market. So, if you take funding worth ₹100, you will pay ₹9.99 interest in a year, which is ₹0.027 in a day. To elaborate, here are 3 scenarios:

Value of existing stock portfolio	Haircut	Funding received after haircut	Interest payable (@ 9.99% p.a.)
₹10,000	10%	₹9,000	₹899
₹1,00,000	15%	₹85,000	₹8,492
₹10,00,000	20%	₹8,00,000	₹79,920

Question 6

Will my shares be transferred to the broker?

Accepted Answer

No, your shares will remain in your Demat account. You will simply have to mark a pledge in favour of m.Stock. When you sell or close your position, the pledge will be removed and the stocks will become free for your use.

Question 7

What is the difference between Margin Trading Facility and Pledge Shares?

Accepted Answer

In Pay Later (MTF), you get funding against cash available in your trading account. Whereas in Pledge Shares, you pledge your existing stock portfolio with m.Stock and in exchange, you receive funding. Did you know, you can use Margin Pledge and Pay Later (MTF) together?

Question 8

How much funding can I get?

Accepted Answer

With m.Stock, you can get up to 87.50% funding in 700+ Stocks. However, funding is providing after accounting for ‘haircut’, which is decided by our Risk Management team. For example, if Infosys Ltd. has a haircut of 15%, then you will receive ₹85,000 in funding against stocks worth ₹1 lakh.

Question 9

What is haircut? Why is it deducted?

Accepted Answer

Haircut is a SEBI mandated mechanism, which protects the broker from unexpected price movement. Every stock has a pre-decided haircut, which is deducted from the overall funding amount. For example, if the total value of stocks in your portfolio is ₹1 lakh and the stock haircut is 10%, then the broker will give you funding of ₹90,000.

Question 10

When will I receive the margin?

Accepted Answer

Instant margin will be added to your ‘Available to trade’ balance.

Question 11

When will I start incurring interest charges?

Accepted Answer

Margins or limits will be credited to your m.Stock account on the next trading day (after Pledge Shares request is raised). However, interest will be charged only from the day you actually start using the margin.

Question 12

Can I sell pledged stocks?

Accepted Answer

Yes, you can sell pledged stocks, without any restrictions.

Question 13

What are the pledge charges?

Accepted Answer

Pledge creation charges is ₹0 & closure charges is be ₹32 per PSN (Pledge Sequence Number) per day (+GST) for Pledge Shares facility.

Question 14

What is a margin call?

Accepted Answer

Margin call is received from the broker when the margin available in your trading account is not sufficient to cover your open positions. On receiving margin call, investor must either infuse fresh capital or square-off their position.

Question 15

What if the margin call is not honored by the client?

Accepted Answer

In case the margin call is not honored, the RMS team will square-off the position on a best effort basis.

Question 16

How can I access the Pledge Shares report?

Accepted Answer

To access Pledge Shares report: Login >> Menu >> Reports >> Pledge/Unpledge

Question 17

How can I avail the Pledge Shares facility?

Accepted Answer

In the menu section, under ‘Products’ choose ‘Pledge Shares’ Choose stocks to be pledged from list of approved stocks in your Demat holdings Enter quantity and click on ‘Pledge’ On the CDSL page, validate pledge using OTP Margins will be added to your ‘Available to trade’ balance on the next trading day You can use this margin to take positions in Intraday, Futures, Options (selling/writing only) and Pay Later (MTF).

Question 18

How can I pledge my shares on m.Stock?

Accepted Answer

To pledge shares on m.Stock, log in to your account and go to the 'Margin Pledge' section. Select the stocks you want to pledge from your demat holdings, confirm the request, and approve it through an OTP-based e-sign on CDSL’s portal. Once approved, the margin is added to your trading account, usually within a few hours.

Question 19

How much margin will I receive from pledging shares?

Accepted Answer

The margin you get depends on the type of shares you pledge and their haircut value. Haircut is a percentage reduction to cover price fluctuations. For example, if you pledge stocks worth ₹ 1,00,000 and the haircut is 20%, you'll receive ₹ 80,000 as usable margin. Different stocks have different haircut rates, based on their risk and liquidity.

Question 20

Will I be charged interest for the margin I get from pledging shares?

Accepted Answer

No interest is charged for using the margin from pledged shares. You’re simply using your own investments as collateral. However, if you use additional margin funding or borrow funds beyond the pledged value, interest may apply. Always check the margin utilisation and funding structure on your m.Stock dashboard.

Question 21

What are the charges for pledging shares on m.Stock?

Accepted Answer

m.Stock charges a small fee for pledging and unpledging shares, as per the depository and clearing partner guidelines. These charges are usually nominal and are displayed transparently at the time of the pledge request. There are no hidden costs or commission-based charges for using the pledge facility. You can check our detailed pricing here: https://www.mstock.com/pricing

Question 22

How can I unpledge my shares?

Accepted Answer

You can unpledge your shares anytime through the m.Stock platform. Go to the 'Pledged Holdings' section, select the stocks to unpledge, and submit the request. The shares will be unpledged once the margin tied to them is cleared. This process is usually completed within one working day.

Question 23

Will the margin I receive change if the price of my pledged shares changes?

Accepted Answer

Yes, margin value changes with share price movement. If the price of your pledged shares rises, your available margin may increase. If prices fall sharply, the margin may reduce. In some cases, you may need to add more margin or reduce your position to avoid penalties or auto square-offs.

Question 24

Are there any cases where I won’t be able to pledge my shares for margin?

Accepted Answer

Yes, not all shares are eligible for pledging. Illiquid stocks, T2T (trade-to-trade) category shares, and penny stocks are usually excluded. Also, only shares held in your demat account with m.Stock can be pledged. Always check the list of approved securities before placing a pledge request.

Question 25

Are there situations where I won’t be allowed to unpledge my shares?

Accepted Answer

You can’t unpledge your shares if the margin from those shares is actively being used in your open trades. To unpledge, you’ll first need to free up the margin either by closing trades or adding extra funds or margin. Once done, you can submit an unpledge request through the platform.

Differences	Pledge Shares	Pay Later (MTF)
Purpose	Allows using existing holdings as collateral	Allows leveraging on available fund
Collateral required	Existing shares in the Demat account	None
Interest charges	Charged on the margin utilised	Charged on the overall funding
Risk of charges	Higher in volatile market conditions	Based on purchased stock performance

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FAQs

What is Pledge Shares?

How does Pledge Shares work?

In which segments can I avail Pledge Shares?

What interest rate does m.Stock charge on Pledge Shares?

How much interest is charged on Pledge Shares?