As an investor you must have heard about the term “Margin against shares”, but only a few understand its actual meaning, let’s discuss this in detail:
What is trading with margin against shares?
As a normal practice, limits for trading in the stock market are given only against bank funds i.e. funds transferred from a client’s bank account. Using the money transferred from the bank to his/her trading account, a client can trade in all segments. However, the majority of the funds of a client are invested in stocks. Thus the money gets locked and even though clients have assets in the form of shares, they are not able to make new trades. Thus to unlock this value hidden in the stock portfolio of a client, a client can pledge his shares to avail trading limits against the shares. This concept of availing margin against pledged shares held in one’s demat account is known as “Margin Against Shares“. The cash margin required for trading is substituted with shares.
All the client needs to do is to pledge his/her shares with the broker to avail the credit against them. The broker will deduct a portion known as a haircut to adjust for the risk due to the price fluctuation of the stock. For example, if a client has 10 shares of Reliance at the current market price of Rs 1000 making the total portfolio value of Rs 10,000 and the haircut is 40%, the client can get a limit for only 60% of the total value of the shares i.e. Rs 6000. The client can trade for a further Rs 6000 in his account.
If there are any debits or losses in the client’s account, such shortfall can be later adjusted by selling the pledged shares. All corporate actions for the shares like bonuses or dividends belong to the client.
What products can I trade with margin against shares with Samco?
A common question and requirements that clients ask for are can I get margin against shares with Samco? At Samco, we have a product that enables clients to trade with margin against shares.
What are the benefits of using StockPlus product?
|Suitable for||Intraday and Positional Traders|
Product types allowed for trading
|BSE – CM, NSE – CM – BO and CO NSE – F&O, NSE – CDS – All product types permitted|
|Sale of Pledged shares||Instant subject to live sale request which can be entered from Samco STAR Dashboard.|
Rs. 1 for lifetime
On Ledger Debit minus lower of (collateral value or 50% of F&O + CDS Margins)
|Positions can be held for||No restriction. Positions can be carried forward as long as sufficient margin exists.|
|Checking Limits in Samco Trading Terminals||“Adhoc Margin” field in trading terminals|
|Pledge and Unpledged charges||Rs. 30+GST per request per ISIN Instant Sale Requests – Rs. 60+GST per request per ISIN|
|Number of Stocks available for Pledge||800+|
|Restrictions on Unpledged Requests||In case of Ledger Debits or Pending Instant sell requests|
|Holdings view in Samco Trading Terminals||Under “Withheld holdings Quantity”|
How can clients subscribe to either of margin against shares products?
Clients can subscribe to SAMCO’s Margin against shares trading products from the SAMCO STAR Back office. Click here to subscribe to SAMCO’s margin against shares trading product.