Stock hypothecation board
The DP will enter the closure request details in the DPM against the pledge/hypothecation instruction number as per the instructions given in the form and verify/release the instruction to NSDL. The details of the pledge/hypothecation closure request are electronically communicated to the DPM of pledgee's DP through the DM for confirmation. The hypothecation agreement permits the broker-dealer to pledge the client's margin securities as collateral for a loan that the BD takes out. It is the credit agreement that, in addition to all of the other terms of the loan, contains the stipulation that the broker-dealer may use the client's margin securities as collateral for the loan that it makes to the client.