An important step to receiving Margin Trading Facility (MTF) is completing the Pledge Request. It is important to complete the Pledge Request to avoid square-off. Let’s learn what MTF Pledge is and how to process it.
What is MTF Pledge?
It is a mandatory process introduced by SEBI. When you buy shares under MTF, you have to pledge those shares to continue holding the position. It needs to be done by 9:00 PM on the same day of purchasing stock. In case you fail to do so, your shares will be squared-off on T+7 days.
MTF Pledge Process
Here’s how you can complete your MTF Pledge Process:
- Once your MTF request is approved, check your Email/SMS for communications related to the MTF Pledge Request Initiation
- Click the CDSL link in the Email/SMS to get redirected to CDSL’s website
- Enter PAN/Demat Account Details
- Select Stocks to Pledge
- Generate OTP
- Enter received OTP to Authorize and complete the Process
With MTF Pledging, when you raise a request to Pledge or Unpledge your shares, a charge of Rs 20/- plus GST will apply per Scrip. Also when there is sell off/square-off, you’ll also incur Unpledge charges automatically if you have pledged your shares.
So that’s it! Margin Trading Facility can transform the way you trade. Just remember a few critical details, and follow the procedure to enjoy this unique facility. Happy Trading!
When can my shares in MTF get squared off?
Here are the two situations that can trigger automatic squaring off of your position.
- You have failed to pledge shares on time, that is, by 9:00 pm on the day of purchase. In this case, automatic squaring off will happen on T+7 day.
- There is a margin shortfall. The pledged shares would get squared off on the 4th day of the purchase.
How is MTF Pledge different from Margin Pledge?
Margin Pledge: Margin Pledge means using your existing holdings/portfolio to get an extra limit/margin to buy more shares.
MTF Pledge: As per SEBI guidelines, shares bought under MTF must be pledged following MTF pledge rules. Unlike Margin Pledge, MTF pledges don’t give additional limits against these shares.
Can I open a new position if I have not pledged to my previous position?
Yes, you can open a new position as long as you can pay the margin.
How will I receive the MTF pledge link for the position taken today?
Once your request for MTF is approved, you will receive the link from CDSL on the same day for the MTF pledge. Please check your Email/SMS for the MTF Pledge Request Initiated notification.