What is Margin Pledge?

Margin pledge, DDPI, and MTF are all gradually becoming essential parts in modern trading, especially for investors who wish for flexibility without selling their long-term holdings. These tools make it easier to access limits, trade efficiently, and manage capital with much more control. Given below is a lucid explanation of how each of these features works and why platforms like HDFC SKY are making them even more accessible.

What is Margin Pledge?

Margin pledge allows an investor to use the value of their existing shares to create additional trading limits. Instead of liquidating shareholdings to raise funds, an investor may pledge them and unlock a usable margin that is based on what they already own. The broker decides how much margin to offer by applying a ‘haircut’.

The lower haircut provides more margin and generally indicates that the stock is considered safer. Higher margin percentages are given to well-established and liquid companies, which can often be between 70% and 85%. Riskier or volatile companies receive lower percentages.

The important point here is that the investors do not lose ownership of their shares. The holdings remain in the demat account, visible and available for sale at any time. Only a pledge marks them as collateral. This margin can be used for:

• F&O trading
• Carry-forward trades
• Margin Trading Facility (MTF)

However, pledged margin does not support delivery buying.

Another benefit is cost control. If the investor uses the pledged limit only for intraday F&O and closes the trade on the same day, there is no interest charge. As stated earlier, the interest only applies when the pledged margin is utilised to carry forward a position or borrow funds overnight.

How to Pledge on SKY?

Step-by-Step Process

1. Go to the Tools tab.
2. Choose Margin Pledge.
3. Select the stock you want to pledge.
4. Select the amount and check how much margin you will receive.
5. Tap Continue to Pledge.
6. Complete the CDSL OTP verification.

Because CDSL processes instructions in real time, pledging works only during market hours. Once verified, the margin appears instantly.

Unpledging is equally straightforward:

• Open your pledged holdings
• Choose the st͏ock
• Tap Unple͏dge

Both pledging and unpledging carry a small ₹20 + GST fee per script.

What is DDPI or Demat Debit and Pledge Instruction?

DDPI is a digital authorisation that makes the selling and pledging of shares faster and more convenient. Prior to DDPI, each sell order needed a new CDSL OTP. This delayed the execution of trade and caused delays during rapid market movements.

After activating DDPI, investors won’t have to use OTPs for every sell order. The broker can debit the shares directly whenever the investor sells them. The same is done in pledging and unpledging requests.

DDPI ͏does not͏ give unrestricted access to the ͏broker.It is limited only to initiatives initiated by the investor through their own trading account.

Why You Should DDPI

DDPI has become essential for modern investors since it removes delays and makes selling, pledging, and unpledging so much easier.

1. Faster Selling

In volatile markets, prices change in seconds. If you wait for a CDSL OTP every time you sell, then the OTP͏ delay can ͏cause you to lose the best exit price. With DDPI, orders are executed instantly without any additional confirmation, helping you act the moment the market moves.

2. Smooth Pledging

Margin creation becomes tough when OTP­s arrive late or not­ at all. DDPI ­removes this problem by allowing pledging and unpledging with a single­ tap. This ensures you get margin exactly when you need it for F&O, intraday or MTF without interruption.

3. One-App Convenience

Without DDPI, you have to switch between your trading app and SMS or email to fetch OTPs every time you place certain orders. This slows you down. DDPI eliminates this step completely, allowing you to complete actions inside the very same app without switching screens.

4. Higher Security

DDPI is SEBI-approved and Aadhaar-based, which means it uses biometric and OTP authentication during setup. It’s safer than the old POA, with only limited rights given to your broker, specifically for selling and pledging. Your holdings stay protected while your transactions become smoother.

5. Better Efficiency

DDPIs serve both long-term investors and active traders. Long-term investors can sell their shares quickly without having to go through repeated OTPs while day traders can instantly generate and release margin. Whether you trade once a week or every day, it makes all the trade actions fast, simple and efficient.

How to Enable DDPI 

Enabling DDPI on HDFC SKY is completely digital and takes less than a minute.

1. Go to the App settings in DDPI

Open the HDFC SKY app and go to your profile or account settings. There you will have a DDPI or Demat Authorisation option exclusively. This is where set-up happens, and it’s designed in a way to take you through the process without confusion.

2. Tap Enable DDPI

From here, in the DDPI section, you will see a button labelled Enable DDPI. Tap on it to start the activation. Now the app will move to the verification stage.

3. Authenticate Using Your Aadhaar-Linked ͏Mobile Number

The system uses your Aadhaar-linked phone number to verify your identity. You will need to type in this number, and the app will verify it instantly. This step ensures that only the real account holder can ͏activate DDPI.

4. Enter OTP

An OTP is sent to your Aadhaar-linked number. Enter the OTP in the app to confirm the request. This ensures secure and authorized activation.

5. Submit Consent 

Finally, the app will show a consent page explaining what DDPI allows. After reading and approving it, tap Submit. Your DDPI instantly gets activated, and you can start enjoying faster and smoother transactions right away.

On completion, the DDPI becomes active instantly. You can then sell and pledge shares without entering multiple OTs.

The Rise of MTF͏ Investing in India

MTF is fast growing in India because it enables investors to buy quality stocks without paying the full amount in advance. Earlier, MTF required heavy paperwork, but today, platforms offer instant activation and easy repayment.

Why MTF is becoming popular?

• Investors want larger positions without blocking full capital
• Digital verification has eliminated old barriers
• Markets are more active, creating frequent short-term opportunities.
• Flexible repayment attracts both new and experienced investors

More investors now use MTF for momentum trades, short-term holds, and systematic buying of strong companies.

Understanding MTF

MTF, or Margin Trading Facility, is a facility that allows you to buy stocks by paying only a part of the total amount while the broker finances the rest. It works like short-term financing for equity delivery. You continue holding the shares in your demat account, but they remain pledged until you clear the funded amount. 

Interest is charged only on the portion financed by the broker, calculated daily. This gives you flexibility and full control over how much you want to borrow and for how long.

 How MTF Works

• Choose an MTF-Eligible Stock: Not every stock qualifies for MTF. You need to pick a stock that is approved under the broker’s MTF list, usually liquid and fundamentally strong companies.
• Pay a Portion of the ͏Share Price: You don’t pay the full amount. You only pay the necessary margin, typically 20% to 50% of the full value of the stock, depending ͏on t͏he s͏tock.
• Broker Finances the Balance: The broker finances the remaining amount. This helps you buy more shares or invest without blocking a large amount of capital.
• Shares Get Pledged Automatically: Once the purchase is done, the shares are automatically pledged. You still remain the owner, but the pledge stays until you repay the funded amount.
• Maintain Margin to Continue Holding: The required margin must be maintained in order for you to continue to hold the position. In case of falling prices, you will need to add funds to keep the position.

Interest is charged only on the amount that is funded, on a daily basis. Since the investor chooses how much to use, MTF gives flexibility and control.

How Margin Pledge Works with MTF

Margin pledge plays a significant role in MTF. When an inves͏tor buys shares on MTF, the shares automatically get pledged. This serves a collateral for the broker.

How They Work Together

• Shares purchased under MTF are pledged immediately
• Investor repays the borrowed amount anytime
• The shares are unpledged once repaid
• Margin percentage depends on the stock’s stability͏

This combination helps investors to take larger positions while keeping ownership and clarity over their holdings.

Dedicated MTF Research Section

HDFC SKY offers a specialised research discovery section specifically for stocks that are suitable for MTF. It saves time and eliminates confusion regarding which shares are is eligible for MTF.

What You Find Inside

• MT͏F-eligible stocks listing
• Trends and strength indicators
• Reasons for stock suitability
• Risk filters applied by the platform
• Margin availability and funding clarity

This section helps both beginners and active traders choose stocks confidently, using researched insight.

Why HDFC SK͏Y?

HDFC SKY brings speed, clarity, and convenience together on one single platform. The app is built to support every investor, from a first-time investor to an advanced trader.

What Makes SKY a͏ Strong Choice

• Clean and intuitive interface
• Instant Pledge and Unpledge
• Fully digital DDP and MTF activation
• Smart research tools
• Transparent charges
• Real-time analytics
• Multi-asset class support

This simplifies the whole margin and MTF experience, allowing investors to focus on making informed decisions while the complex processes are being handled in the background.