Thank you for these questions. They are the right ones to ask, and we’re glad to answer each clearly.
1. Ownership of your fully paid securities
Yes. Your fully paid securities remain your property and continue to be held for your benefit. The transition to a zero-leverage margin account does not change beneficial ownership of anything in your account.
2. Lending, rehypothecation, or pledging without your consent
No. Under SEC Rules 15c3-3 and 15c2-1, fully paid and excess margin securities cannot be pledged, repledged, loaned, or hypothecated unless you have signed a separate written agreement authorising it. You have not signed such an agreement, and the account transition does not constitute one.
We want to be transparent about why this question arises. The Customer Account Agreement contains a general lending authorisation clause that applies to margin accounts, and the Margin Risk Disclosure Statement references a firm’s right to hypothecate or lend shares held in a margin account. Both are subject to the fully paid / excess margin securities exclusion described above. Because your account is zero-leverage, no credit is ever extended to you, so there is no debit balance and your securities remain fully paid at all times. They therefore sit within that protected category.
3. Automatic enrolment in a securities lending programme
No. This transition does not enrol you in any securities lending or share lending programme. Fully paid securities lending is governed by a separate Master Securities Lending Agreement, which requires your explicit, separate consent. It is not part of this transition.
4. Confirmation on collateral and third-party lending
Confirmed. Your fully paid shares will not be used as collateral or lent to third parties unless you explicitly opt into such a programme in the future through a separate signed agreement.
5. Other material changes to your rights
Beyond the three items you listed, the changes are as follows:
- You will be accepting the Margin Risk Disclosure Statement in addition to your existing disclosures. Several risks described in it — margin calls, forced liquidation, losing more than you deposit — arise only where credit is extended, which cannot happen in a zero-leverage account.
- Your account will be governed by the margin provisions of the Customer Account Agreement rather than the cash account provisions.
- Deposits, withdrawals, corporate actions, dividends, voting rights, and SIPC coverage are unchanged.
- Your account remains fully compliant with LRS guidelines. No leverage is available, and none can be extended.
You can review the full text of both documents on our Legal Hub and on DriveWealth’s legal site before providing consent.
If anything here needs further clarification, please write to us at help@vestedfinance.co or call +91 95133 75607 and we will be happy to walk you through it.