How safe is it to pledge our securities with Zerodha?
Zerodha has always been transparent and clear about the safety of the investors. One of the reasons that clients hesitate to pledge their securities is their concerns regarding the safety of their investments.
As per the new pledging mechanism by SEBI, the securities doesn’t leave your Demat account even when they are pledged; Instead, a pledge is marked in favour of the broker. The broker is required to open a separate Demat account labelled ‘TMCM – Client Securities Margin Pledge Account’ for this purpose (TMCM stands for Trading Member Clearing Member). The broker then re-pledges these securities in favour of the Clearing Corporation and obtains margins.
In this way, the Broker won’t be able to misuse the client’s securities as they won’t be leaving their Demat. You can click here to know more about it.
Click here to know more about Pledging in Zerodha.