Government Securities (G-Secs), considered the safest instruments, were part of the pledgable list on Dhan till last to last Friday and provided margin (cash component). Many traders planned their trades and even purchased these securities specifically because they were eligible for pledge.
Now, some G-Secs are suddenly showing as not eligible, which has reduced available margin and directly impacted percentage returns. As a broker, Dhan already takes enough cash margin for every trade, so the removal of G-Secs which are safe and also have liquidity in the market (even if with some slippage) raises concern.
If there is any specific risk or regulatory reason for this change, it should be communicated clearly so as traders can plan accordingly or square off positions if required. Sudden changes like this make it very difficult to plan positions and manage risk effectively.
Requesting the Dhan team, and especially @PravinJ sir to kindly help to understand reason behind this change and if there is a possibility to re-include these G-Secs in the pledgable list.
Hi @Siddharth_24, we wanted to inform you that above mentioned GOI is not present or removed from the exchange-approved list. You can refer to this Google sheet under the bonds sheet for approved schemes.
Thank you for the update. I would like to clarify a few points:
Earlier, these G-Secs were available for pledge with only a 10% haircut, but now they are showing as 100% haircut (effectively not eligible). Why has this change been made? Is it from Dhan’s side or as per exchange guidelines?
I specifically purchased these bonds because they were available in your pledgable list, to use them for margin in option selling. I have been pledging these G-Secs for a long time and actively using the margin for option selling. Suddenly marking them as ineligible has directly impacted margin planning.
G-Secs are the most secure instruments so why are they allowed and then suddenly disallowed for pledge?
If there is a specific regulatory or risk-based reason behind this, kindly share it so we can also adjust our portfolios accordingly. Transparency here will really help traders like us in planning better.
@amish thanks for sharing your view . True, liquidity is lower in most G-Secs, but buyers are always available in market depth. Even if the govt stops issuing a series, the sovereign guarantee remains, and lower supply usually makes them trade at a premium (as they are with decent coupon rate).
Since pledged margin is mainly for F&O where brokers already collect SPAN + exposure margins, the actual risk is very limited. And in case of a square-off, these bonds usually find buyers within ~2% gap.
. True, liquidity is lower in most G-Secs, but buyers are always available in market depth. Even if the govt stops issuing a series, the sovereign guarantee remains, and lower supply usually makes them trade at a premium (as they are with decent coupon rate).