Why do I have to authorise/pledge my MTF trades with NSDL/CDSL?

As per SEBI regulations, it is mandatory to authorise/pledge shares bought using the MTF facility with your respective depository (NSDL/CDSL).

Since MTF trades are partially/fully funded by your broker (Geojit), you are required to pledge these shares with the concerned depository. This is done to protect brokers from potential non-repayment of the borrowed amount. 

Hence, when you buy shares under MTF, Geojit and NSDL/CDSL will send you a forward pledge creation intimation. For your trade to be considered as an MTF position, you will be required to pledge the purchased shares by accepting either of the pledge requests (from Geojit or your depository) by 12:00 p.m. on the settlement date (T+1). The purchased shares will then be marked as 'Pledged' in your account. 

If you fail to accept the request within the specified time, your purchase will be treated as a regular delivery trade under the cash segment.

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