Hi Dhan Team,
I am new to dhan platform. I mainly use it for mtf?
At the end of each trade, I have to pledge the stocks to dhan.
My question is, in case anything happens to the broker’s business, will my fund and pledged stock have some kind of security or not? what can happen in the worst-case scenario?
please guide.
Hi @Ankuk
Stock Broking regulations are much stricter and ensure investor protection all times, thanks to SEBI as regulator.
Not sure what risks you would think of as MTF, the stocks in this case are in your demat account and are in pledged form. For funds, along with your own funds - we as brokers also provide funds to exchange for MTF. So it is as much as a risk for the broker as well as much for the client.
Happy to answer if there is a specific concern. Otherwise Indian stock markets and intermediaries are one of the best regulated in the world.
hi @PravinJ thanks for the reply. Much Appreciated
Let us take a hypothetical case.
If the broker goes out of business and decides to stop its operations.
At that time if there were some open positions with MTF and stocks were pledged to the broker name.
Question 1: What will happen to the pledge stock?
Question 2: What about mtf margins utilized? From where it will be collected?
Question 3: What will happen to my idle cash in the broker’s account?
Just want to be an informed investor.
@GalaticX
I am talking about any broker in general. Not a specific broker.
Hey @Ankuk ,
Firstly, please be assured that such a situation will not arise thanks to SEBI’s regulations. Any pledged stocks remain in your demat and we cannot utilise them unless you have an outstanding debit that you have not paid. Second, you will get back all your free cash as well as stocks post fulfilling any margin obligations that may arise in the scenarios mentioned above.
Please let us know in case of any other concerns.
Thanks,
Pranita