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Shares as collateral facility - Reliance Securities

  1. Shares as collateral facility - Reliance Securities

    Click Here to open a Trading Account with "Zerodha" through us and get FREE Training on Futures and Options Trading Strategies.
    1. Who can avail shares as collateral facility?
      This facility is activated for all Reliance Securities Limited (RSL) customers except NRI.
    2. From where and how can a client avail shares as collateral facility?
      No action is required from client side. System automatically calculates the collateral value for all the eligible scrips lying in client’s depository account (after applying haircut) & allows the client to take exposure against collateral.
    3. Will all the scrips allowed for trading by RSL be considered as collateral?
      No. RSL will decide from time to time the list of stocks that will be available as collateral.
    4. How will the client view his collateral value?
      Collateral value will be reflected in the “Limits report” under the “Positions” menu available on the Trading portal, Insta Plus. This limit will be shown as “Collateral Value”.
    5. How is the collateral value calculated?
      Collateral value of an eligible stock lying in the depository account will be calculated as (Quantity* Last Traded Price)*Applicable Haircut Percentage. The haircut % for each stock will be decided by the company (Ranging between 20% and 60%), applicable from time to time. For example if client has 100 shares of Reliance Capital in his depository account then the collateral value will be calculated as follows:
      • Market value of shares = (last traded price x quantity) Rs.1000 * 100 = Rs. 1,00,000
      • Applicable hair cut for Reliance Capital scrip = 20%
      • Collateral value given against Reliance Capital stock = [100000-(20%*100000)]= Rs.80,000
    6. For which positions the benefit of collateral value be given?
      Clients can take intraday positions in the cash segment (MIS) using the collateral value as margin. Clients can also take Futures and Options sell positions using the collateral value as margin.
    7. Will MTM Loss made on any position be adjusted against the collateral value?
      No, MTM Loss will not be adjusted against these limits. But MTM Loss will get reduced from balance available limits.
    8. What happens if a client makes losses on the positions taken against the collateral value?
      If position taken by client against collateral value as margin is running in loss, such positions can be liquidated by RSL if available margin falls below minimum margin requirement. This liquidation of position by RSL may result in realized loss for client.

      If client ledger doesn’t have the sufficient cash balance to cover for that loss, his collateral value can also be liquidated to meet the shortfall. RSL also reserves its right to sell the other shares of the client in case the shortfall is not met by liquidation of collateral, as mentioned above.
    9. Who will get the benefit of the corporate actions like bonus, dividends, etc. while the stocks are taken as collateral?
      Stocks will continue to remain in clients beneficiary account and hence clients will get the benefits in their name.
    10. Will there be any auto pledge creation at the end of day?
      If client has taken position in derivatives & there is a margin short fall at end of trading hours, then auto pledge is created on the scrips (lying in client depository account) eligible to be marked as collateral to the extent of margin short-fall.
      In case of pledge stocks, any off market transfer given by clients on such pledged shares are likely to be rejected due to marking of pledge, unless unpledged.

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