InvestorQ : What does it mean when SEBI allows to use shares in depository as margin?
Aashna Tripathi made post

What does it mean when SEBI allows to use shares in depository as margin?

Answer
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Tisha Malhotra answered.
4 months ago


As an additional facility to market participants, SEBI has allowed shares in depository account to be pledged and used as margin till August 31.

As per the new framework effective Jun 01, trading or clearing member could accept collateral from clients in the form of securities only by way of “margin pledge”.

Considering the COVID-19 lockdown, SEBI has extended the date by 3 months. There was also a demand from the depositories and the TM / CM that they would require more time to upgrade their software as most were operating on skeletal work force last 3 months.

However Power of Attorney held by TM/CM will not be considered equivalent to collection of margin from June 1 itself. There were some concerns that if this facility was withdrawn, then many traders would be inclined to close their positions putting pressure on the markets. That need not be an issue now.