Why is a nudge displayed mentioning that CDSL authorisation is mandatory for MTF trades?

A nudge is displayed to inform that CDSL authorisation is mandatory for MTF. This authorisation is necessary to meet regulations, as shares must be pledged at CDSL for MTF trades to be processed and for broker funding. The purchased shares remain in the demat account but are marked as “pledged” in favor of the broker.

Once the MTF order is placed, a pledge request will be sent via email by 5:30 PM on the same day. For the MTF order to be successful, the pledge request must be accepted before 7 PM. To authorise the pledge request, follow these steps:

1. Click on the link provided in the mail.
2. Enter PAN Card No. or the 16-digit Demat Account No.
   
3. Click on Submit.
4. Click on the checkbox to select the instruments.
5. Click on Generate OTP and enter the OTP received on mobile and email.
6. Click on Submit.

If the CDSL authorisation is not completed before 7 PM:

• The trade will automatically convert to a delivery trade (CNC).
• If there are insufficient funds to cover the full margin for a delivery trade, the Zerodha account will display a negative balance.
• If the negative balance remains uncleared, Zerodha will sell the shares purchased using MTF to recover the outstanding amount.

To learn more, see Margin Trading Facility (MTF) FAQs.