Collateral in TMS – Everything You Need to Know

Collateral in TMS

For new investors, collateral seems to be a little confusing topic. So, in this article, I am going to answer the queries related to collateral in TMS. We have already made the clarification video on Collateral in TMS you can watch it below.

What is Collateral?

Collateral is an amount you have to load to your TMS account just before you buy any stocks. This amount is loaded to the TMS account just for security purposes. After you buy any stocks, the broker will deduct the amount from this collateral.

One of the features of TMS is the banking integration using Nepal Clearing House Limited (NCHL). When the trade is done between clients, the bank account of brokers and clients can be in different banks, however, the money needs to flow for trade settlement. This is where integration using NCHL was implemented.

What is the collateral amount and trading limit?

The collateral amount is the amount of your security like, cash deposit, cheque deposit, etc and the Trading limit is the limit provided by brokers for your transaction. The trading limit is normally four times your collateral amount. i.e. if you load 10,000 collateral, you can buy stocks of up to 40,000. But 30000 should be paid within the next 2 trading days.

How to load collateral in TMS?

As of today, there are many ways you can load collateral to your TMS account.

They are

  1. Through Connect IPS
  2. Direct deposit to the broker’s bank account
  3. Through Global IME internet banking
  4. By leaving the cheque at the broker office

collateral load in TMS

Why do I need to load collateral?

Collateral is the amount the is loaded just for security purposes. Sometimes, the stock buyer buys the stock and does not come to contact. At this time, the broker has to pay the amount to the seller.

How much collateral do I need to load?

There is no hard and fast rule about how much exactly needs to be loaded. But in general, brokers ask you to load at least 25% of the total share buying amount.

For example, if you are buying the stock of Rs. 100,000 amount. Then you have to load at least 25% i.e 25000 as collateral. You can check the multiplication factor (how much amount of stock you can buy out of your available collateral amount) from TMS.

Go to Fund Management > Collateral Management > Manage Collateral

Collateral summary

In the above figure, you can buy up to twice the amount of your available collateral amount.  This means you can buy up to 2,28,000 worth of shares. and pay 50% amount within the next 2 trading days.

How to pay the amount?

Go to Fund Management > Fund Settlement > Buy Information. You will have two options for Payment.

  1.  EOD Pay In
  2. Collateral Payment

Payment option

What is EOD Pay In

EOD (End of Day) payment is those amounts which you have to pay separate amounts besides collateral amount. If you have loaded 25% collateral then you have to pay the rest (75%) of your amount from EOD payment option.

  • Client can initiate Net Settlement via EOD Pay In where amount payable by client will be transferred to the broker’s account through NCHL.
  • In the Payment Settlement tab, initiate payment by clicking on the “Make Payment” button at bottom right.
  • Check “EOD Pay In”, enter Bank Details of client and exact amount as Net Payment Payable.

Collateral Payment

  • Client can initiate Net Settlement via Collateral Payment where amount payable will be deducted from available Collateral.
  • Go to Payment Settlement of My Information, initiate payment by clicking on “Make Payment” button at the bottom right.
  • Check “Collateral Payment”, enter the exact amount as Net Payment Receivable by Client, and click on “Make Payment”.
  • Click on “Confirm Payment” in the dialog box that appears.
  • Payment amount will be deducted from available Collateral.
  • You can view the statement of payment debit in the Account Statement

Why there is no collateral payment option? 

If your collateral amount is less than your total purchase amount, then the Collateral Pay will be disabled. You can load the rest of the 75% amount (because 25% amount is already loaded) to the collateral and after it is loaded, the Collateral Pay option will be enabled.

How to refund the collateral amount from NEPSE TMS?

If you have loaded amount in your TMS and you think that you will not buy any stock for a long time then you can refund your collateral amount back to the bank account. For that, go the

Fund Management > Refund Collateral > Chose Bank > Put the amount (Check Max Refund Allowed) as shown in the image below.

Refund Collateral

NOTE – Do not forget to contact your broker after the refund. Sometimes you may not get a refund if you do not let them know. Note: Refund amount requested should be less than or equal to Max Withdrawal Allowed.

Information regarding collateral deposited, utilized and collateral available is displayed at the top. Select the account for which the broker has to credit. Enter the amount and click on submit.

You can monitor the status of your request with Approved/Success/Inprogress/Failed tabs.

Can I Use Global IME Bank M-banking to load collateral?

No, you need to have internet banking of Global IME Bank. You can not load collateral from Global IME M-banking.

Global IME internet banking

Should I have my own Connect IPS account to load collateral?

No, it is not compulsory. You can use others’ connect IPS to load collateral. However, it is easy for you to have Connect IPS account for stock trading. The broker also sends money to your bank through ConnectIPS. We recommend having your own ConnectIPS account (verified bank). Check the video below about ConnectIPS.

Should Connect IPS be of the same bank as your Demat account?

There is no relationship between Demat account and Connect IPS. You can verify multiple banks with Connect IPS. You can use any bank (set as a primary bank) for your connect IPS.

What is Cash Collateral?

Cash collateral is those amount that is deposited through Connect IPS, internet banking,  cheque, or direct bank transfer by yourself.

What is Non-Cash Collateral in TMS?

Non-cash collateral is updated by your broker. Whatever the amount adjusted by the broker in your TMS collateral is non-cash collateral. For example, if you load 25,000 cash from ConnectIPS to your TMS collateral and the broker allows you to buy 100,000 worth of shares, then 75,000 is non-cash collateral. Non-cash collateral has to be paid later.

To simply understand,

  • Cash Collateral – Actual cash deposited by you
  • Non-cash Collateral – Adjusted by broker

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