Margin Sbi prepaid forex card rates Shares in Demat Account – How it works? Published on Wednesday, February 18, 2015 by Chittorgarh.
We can help you find the right broker for your trading needs. Margin against share is a loan against share an agreed interest rate offered by your stockbroker for trading purposes. It is a value-added service provided by the share broker. This service offers the client to use shares in their demat account to get the margin funding needed for trade. Very few stockbrokers in India offer this product as there is a higher risk associated with it. Brokers have the “Cash-Collateral proportion” which client has to maintain.
The amount of margin made available is calculated by reducing ‘haircut’ from the current market price of the equity share. Mark to Market losses, customers need to have cash margin. Fail to provide the cash margin leads to sell off the stocks he kept for margin to settle the obligation. Margin against share is the service provided by the broker to its customers who hold shares in their demat account for long-term investment and would like to use them as collateral for the loan. In simple words, if the customer is out-of-money in the trading account or needed immediate cash for trading, he could use shares and get margin needed for trading. The broker gives margin to its customers for the securities held by the client in their demat account. Visit brokers back-office website and go to your demat holding page.
Click on Pledge Share button next to the share you would like to pledge. These shares are called Collateral Holdings or pledged holdings. The broker deducts a certain percentage as a haircut for the price fluctuation of the holdings and allows the client trading limits for the balance amount. The client uses this margin for trading. Are there any additional charges for using margin against shares? Interest is charged at around 0. Pledging and unpledging the shares cost around 50 rs per script.
Note that all the corporate action benefits like Dividend, Bonus, Rights Issue, etc shall accrue to the client and not to the broker since the client continues to be the end beneficiary of the shares. How is the margin being calculated for shares client transferred to the broker for margin funding? The client gets margin against the shares after the exchange prescribed haircut. Stock exchange prescribed the haircut and its same for all brokers. The Cash-Collateral proportion in clients account for the position held by the client will always be calculated in the ratio of 10-90.
Accordingly, to utilize the entire Rs 85,000 collateral benefit client will need to have a minimum cash margin of Rs. Brokers who offer margin against shares Many brokers in India offers margin against share facility. SAMCO SAMCO, the Mumbai based discount stock broker offers a variety of leverage products. This facility is not available for any other trading segments. ICICI Direct India’s largest broker ICICI Securities is offering this service to its customers since Jan 2012. ICICI customers can use shares in their demat account as margin for equity trading.
Customers can put to use their existing stocks and create limits to invest and trade. I use ICICI Direct and have been using shares as margin for FnO trading regularly. Third, there is no interest to be paid whatsoever on the pledged money. Also, I have not tried others per se, but most of these features do put me off from doing so. There is some interest you have to pay on your pledged margin . One of the pledged stocks has declared a dividend.