Margin Pledge

Margin pledge is the process by which an investor pledges securities—such as stocks or mutual fund units held in their demat account—as collateral to their broker to obtain margin (additional buying power) for trading in equities or derivatives, without liquidating those holdings. SEBI introduced a formal margin pledge framework in 2020, requiring investors to explicitly authorise the pledge of their securities through a one-time password (OTP)-based process rather than allowing brokers to use client securities without explicit consent. The pledged securities remain in the investor's demat account but are marked as pledged, and the broker provides a percentage of their market value as collateral margin.