What is Pledge Invocation?

Pledge invocation refers to the process where pledged securities are transferred from the pledgor’s pledged balance to the pledgee’s beneficial owner account when a margin shortfall or negative ledger balance occurs. Upon invocation, the status of the pledge is updated to "closed, invoked."

When Does Pledge Invocation Happen?

Pledge invocation occurs when securities (stocks, SGBs, mutual funds, or ETFs) pledged as "Margin Pledge" need to be liquidated due to specific reasons outlined below. Invocation charges, along with applicable statutory charges, will be levied for each invocation.

Scenarios Leading to Invocation

• Negative Ledger Balance: If the client’s ledger balance turns negative and the shortfall is not covered before the next trading session.
• Market Conditions: Securities may be invoked based on market volatility, changes in valuation, or overall market conditions.

Important Notes:

1. Position Liquidation: Collateral or positions will be squared off at the prevailing market price. Any resulting loss is the client's responsibility. Clients must monitor their positions and maintain adequate margins.
2. Type of Collateral Invoked: Both cash equivalent and non-cash collateral can be invoked as required. There is no predefined choice of securities during invocation.
3. Invocation Value: Liquidation will be slightly higher than the ledger debit to cover statutory charges and market fluctuations during order execution.

Example: Scenario Leading to a Negative Ledger Balance

• The client must bring in ₹1,00,000 + charges in cash before the next market opening to clear the negative balance.
• Pledge Invocation:
  • For RI Accounts: Navia will invoke the pledge and liquidate collateral for ₹1,00,000 + charges.
  • For NRI Accounts: Orbis (our Clearing Member for NRI Trades) will invoke the pledge and liquidate collateral for ₹1,00,000 + charges.