Your pledged shares were squared off because your account had a negative balance after you used collateral margins for trading.
When you pledge your holdings to get collateral margins and your trading results in a negative account balance, Zerodha may square off your pledged securities to cover the debit amount.
When does Zerodha square off pledged shares?
Zerodha squares off your pledged shares in these situations:
For negative balances from any trading activity:
- If your account goes into debit due to option buying and stays negative for four consecutive trading days, you cannot use collateral margins for trading from the fifth trading day onwards.
- If your account goes into debit due to futures trading or selling options, you cannot trade using collateral margins the next day (T+1).
You can resume trading with collateral margins once you clear the debit.
How much will be squared off?
Zerodha's Risk Management System (RMS) will sell your pledged securities only up to the extent of your negative balance.
Example: If you have a debit of ₹1 lakh and total pledged securities worth ₹5 lakhs, the RMS team will sell pledged securities worth ₹1 lakh to clear your debit.
You will receive prior notification before Zerodha squares off your pledged securities. You will be charged a Delayed Payment Charge (DPC) on the debit balance.