{"id":12216,"date":"2026-05-22T13:38:56","date_gmt":"2026-05-22T13:38:56","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/margin-pledge\/"},"modified":"2026-05-22T13:38:56","modified_gmt":"2026-05-22T13:38:56","slug":"margin-pledge","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/margin-pledge\/","title":{"rendered":"Margin Pledge"},"content":{"rendered":"<p><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/margin-pledge\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Margin pledge<\/a> is a <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/sebi\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>SEBI<\/a>-approved way to use the <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/shares\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>shares<\/a> lying in your <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/demat-account\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">demat account<\/a> as collateral for <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/trading\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>trading<\/a> margin &mdash; instead of keeping idle cash with your <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/broker\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>broker<\/a>. You pledge specific <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/stocks\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>stocks<\/a> or ETFs in favour of your broker; in return, the broker&rsquo;s clearing member gives you margin to trade <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/futures-and-options\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">futures and options<\/a>. It is one of the most powerful tools available to active Indian traders.<\/p>\n<div><strong>Key takeaways:<\/strong>\n<ul>\n<li>Margin pledge lets you use approved stocks\/ETFs as collateral for F&amp;O margin.<\/li>\n<li>Pledged shares stay in your demat &#x2014; only a marking is placed in favour of the broker.<\/li>\n<li>You receive collateral value after a haircut prescribed by the exchange.<\/li>\n<li>Each pledge requires an OTP from CDSL\/<a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nsdl\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>NSDL<\/a> &mdash; a SEBI mandate since 2020.<\/li>\n<li>Half of the F&amp;O margin must be in cash; pledge can cover the other half.<\/li>\n<\/ul>\n<\/div>\n<h2 id=\"what-problem-margin-pledge-solves\">What problem margin pledge solves<\/h2>\n<p>Active F&amp;O traders typically have lakhs of rupees in margin requirements. Keeping that as idle cash is inefficient. Margin pledge lets traders deploy stocks they already own &mdash; a long-term <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/portfolio\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">portfolio<\/a> of HDFC Bank, Reliance and <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/nifty\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>Nifty<\/a> BeES, for example &mdash; to back their trading margin while still retaining the upside of those shares.<\/p>\n<h2 id=\"how-the-process-works\">How the process works<\/h2>\n<ol>\n<li>Decide which holdings you want to pledge from your demat.<\/li>\n<li>Initiate the pledge request on your broker portal.<\/li>\n<li>CDSL or NSDL sends an OTP to your registered mobile\/email.<\/li>\n<li>Confirm with the OTP &#x2014; the depository marks the shares as pledged.<\/li>\n<li>Your broker&#x2019;s clearing member receives the pledge notice and credits margin to your <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/trading-account\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">trading account<\/a> after the haircut.<\/li>\n<\/ol>\n<h2 id=\"understanding-the-haircut\">Understanding the haircut<\/h2>\n<p>Exchanges apply a &#x201C;haircut&#x201D; &#x2014; a percentage discount on the value of pledged shares &#x2014; to protect against price <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/volatility\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">volatility<\/a>. Large-cap indices have lower haircuts (around 10&#x2013;15%), while small-caps may face 40% or higher. The remaining value is what you receive as collateral margin.<\/p>\n<p>Example: Pledge &#x20B9;5,00,000 of Nifty BeES with a 10% haircut. You receive &#x20B9;4,50,000 of margin for trading.<\/p>\n<h2 id=\"the-50-50-cash-collateral-rule\">The 50:50 cash-collateral rule<\/h2>\n<p>SEBI requires that at least 50% of the total margin for an F&amp;O position be in cash or cash-equivalents. The other half can come from pledged stock collateral. If your collateral exceeds 50%, the exchange does not count the excess. Cash-equivalents include liquid <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/mutual-fund\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">mutual fund<\/a>s, government securities, and certain liquid <a class=\"glossaryLink\"  href=\"https:\/\/lemonn.co.in\/blog\/glossary\/bonds\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'  tabindex='0' role='link'>bonds<\/a>.<\/p>\n<h2 id=\"pledge-charges-and-unpledge\">Pledge charges and unpledge<\/h2>\n<table>\n<tr>\n<th>Item<\/th>\n<th>Typical fee<\/th>\n<\/tr>\n<tr>\n<td>Pledge creation<\/td>\n<td>&#x20B9;20&#x2013;30 per ISIN (one-time)<\/td>\n<\/tr>\n<tr>\n<td>Unpledge<\/td>\n<td>Often free<\/td>\n<\/tr>\n<tr>\n<td>Renewal \/ re-marking<\/td>\n<td>Free unless ownership changes<\/td>\n<\/tr>\n<\/table>\n<p>Unpledging is straightforward &#x2014; request it via the broker portal, the depository updates the status, and the marking is removed.<\/p>\n<h2 id=\"risks-and-considerations\">Risks and considerations<\/h2>\n<ul>\n<li><strong>Forced sale:<\/strong> If F&amp;O losses exceed your free margin, the broker may sell pledged shares to recover.<\/li>\n<li><strong>Corporate actions:<\/strong> Pledged shares still entitle you to <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/dividend\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">dividend<\/a>s, bonuses and rights. Notifications continue normally.<\/li>\n<li><strong>Illiquid stocks:<\/strong> Some scrips are not on the approved collateral list. Check before assuming you can pledge.<\/li>\n<\/ul>\n<h2 id=\"frequently-asked-questions\">Frequently asked questions<\/h2>\n<div>\n<h3 id=\"can-i-sell-pledged-shares\">Can I sell pledged shares?<\/h3>\n<p>No, not until you unpledge them. Pledged shares are locked for the duration of the pledge.<\/p>\n<h3 id=\"do-i-receive-dividends-on-pledged-shares\">Do I receive dividends on pledged shares?<\/h3>\n<p>Yes. Pledging affects collateral status, not ownership.<\/p>\n<h3 id=\"what-is-the-otp-for-during-pledge\">What is the OTP for during pledge?<\/h3>\n<p>It is a SEBI mandate ensuring only the demat holder can authorise the pledge &#x2014; protecting against broker misuse.<\/p>\n<h3 id=\"does-lemonn-support-margin-pledge\">Does Lemonn support margin pledge?<\/h3>\n<p>Yes. Margin pledge is a standard feature for F&amp;O-enabled accounts at most Indian brokers.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Margin pledge is a SEBI-approved way to use the shares lying in your demat account as collateral for trading margin &#x2014; instead of keeping idle cash with your broker. You pledge specific stocks or ETFs in favour of your broker; in return, the broker&#x2019;s clearing member gives you margin to trade futures and options. It [&#x2026;]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-12216","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Ashutosh","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"Margin pledge is a SEBI-approved way to use the shares lying in your demat account as collateral for trading margin &#x2014; instead of keeping idle cash with your broker. You pledge specific stocks or ETFs in favour of your broker; in return, the broker&#x2019;s clearing member gives you margin to trade futures and options. It&hellip;","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/12216","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/12216\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=12216"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}