If you are a trader and the terms MTF Pledge and Margin Pledging puzzle you, you are at the right place. The table below lets you know how they are different from each other.
| MTF Pledge | Margin Pledge | |
| What does it mean? | It is a mandatory process introduced by SEBI. When you buy shares under Margin Trading Facility (MTF), you have to pledge those shares on the same day before 9 pm to continue holding the position. | Margin Pledge means using your existing securities in your Demat account as collateral to avail extra margin.
It functions like any other mortgage loan where you use an asset as collateral. |
| Product Availability | Available against the pledged shares only for shares bought under MTF. | Available against the pledged securities from Demat account. |
| How to Pledge? | Once a trade is successfully executed under MTF,
● 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 |
● Log in to Angel One application, click ‘Funds’ at the bottom of the page, click ‘Pledge Holdings’
● Click ‘ Increase Margin’ and select the securities and quantity for pledging ● Click ‘Create Margin’ to initiate the approval process ● Look for an email/SMS from CDSL and enter the received OTP to approve the Margin Pledge request
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| Timeline to pledge | You need to pledge the shares purchased under MTF before 9 pm on the day of purchase. | You can pledge your securities whenever you want to increase your additional limit/margin. |
| What happens if you do not pledge on time? | If you don’t pledge on the same day before 9 pm or have a margin shortfall, it will trigger automatic squaring off your position on T+7 day. | You can pledge the securities anytime to get the additional limit/margin. |
| What can be pledged? | Approved Equity shares. | Approved Securities(Stocks, Exchange Traded Funds, Sovereign Gold Bonds, Mutual Funds). |
| Charges applicable on Angel One | The cost of MTF Pledge or Un-pledge is Rs 20 + GST per scrip irrespective of the quantity.
Un-pledge charges will be levied on the direct selling of pledged scrips as well. |
The cost of Margin Pledging or Un-pledging is Rs 20 + GST per scrip irrespective of the quantity.
Un-pledge charges will be levied on the direct selling of pledged scrips as well. |
While margin pledge lets you enhance your buying capacity to place a larger bet in the market, MTF pledging is a mandatory practice imposed by SEBI.
We hope the above table gives you a clear interpretation between MTF Pledge and Margin Pledge. We recommend that you broaden your understanding of these pledges to make informed choices while trading.
To learn more about MTF Pledge, click here
To learn more about Margin Pledge, click here
Disclaimer: Investments in the securities market are subject to market risk, read all the related documents carefully before investing.
