What will happen if I do not pledge shares purchased under MTF before 12 p.m. on T+1?
Shares bought under MTF must be pledged (by the client) by 12:00 p.m. on the settlement date (T+1) to be considered as an MTF position. If not, it will be treated as a regular delivery trade under the cash segment.
If you do not have sufficient funding (100%) for the delivery trade, the shares will be auto-pledged to Geojit's CUSPA (Client Unpaid Securities Pledgee Account) and treated as per the guidelines issued under the handling of unpaid securities.
For example, Mr Antony has a fund balance of Rs. 50,000 in his trading account. He buys shares for Rs. 1 lakh using the MTF facility on Monday (T). As a result, he will be required to pledge these shares with Geojit by 12:00 p.m. on the settlement date (T+1- Tuesday). If he does not pledge the shares, the trade will be converted to a delivery trade and the shares will be marked as pledged to Geojit's CUSPA account.
Mr Antony will be allowed to bring in funds till T+4 to cover his trade. If he does not, the shares will be sold on T+5 to the extent of the fund shortage in his account. In this case, shares worth Rs. 50,000 will be sold after considering his available cash balance of Rs. 50,000. The remaining shares will be transferred to his demat account.
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