Originally answered to "Do brokers charge interest on collateral to trade in F&O? I did hear that many of them do! "
Hey @Radhika S52, Please stay away from any broker that levies interest on collaterals for trading in F&O. Why? Because when you pledge shares/securities with your broker, they, in turn, forward the pledge to the exchange, and margins are provided by the exchange after applying the haircut. The broker doesn't infuse any capital to fund the client's trading activities. Hence, it would be unethical for any broker to levy interest charges. Here's a flowchart of how pledging works: