Margin Trading Facility (MTF)

Ans. Margin Trading Facility is a feature that helps traders or investors avail credit from brokers with a fraction of money known as margin placed with them. Brokers also provide credit under MTF against securities in your demat account as collateral. MTF is easy to access and gives you instant liquidity for investing in shares. MTF or Pay Later has become a popular concept in trading This facility offers several benefits to equity traders. In equity markets, MTF is an excellent tool for investors and traders to trade even with a small upfront investment and remaining amount funded by the broker. The interest is charged on the amount utilised for the number of days. The upfront margin can be put down as cash or shares in the investor's demat account. The shares are held as collateral against the margin funding provided.

Ans: The default interest rate applicable is 0.03% per day.

Ans: Yes, SEBI mandates all shares purchased under MTF to be pledged until the borrowed amount is paid off.

Ans: You can hold MTF stocks for 365 days, you need to square off the borrowing within 365 days.

Ans: SEBI requires shares purchased under MTF to be pledged. Hence investors must complete the process on the same day by following below steps: After applying for MTF request, you will receive a message for Pledge Request’. The link received on SMS/Email will direct you to the Depository’s site. Here, key in your demat/PAN details. Select the shares to be pledged. Generate OTP prompt will send OTP to your registered no/email. Authorize the transaction with OTP and complete the pledge.

Ans: No limit is set on your trading account, it will auto-update on your funds or collateral limit added as a margin .

Ans: You will see your MTF stock purchases under the ‘Positions’ tab in your trading account.

Ans: There is no direct repayment as such for MTF. When you buy shares via MTF, they appear under the Positions tab in your account. You are required to exit or square off your positions within 365 days

Ans: No, MTF facility is applicable only for equity trading and not allowed in other segments.

Ans: Yes, the pledged shares are held in your demat account, you will receive all corporate action benefits like bonus, dividend credits.

Ans: The default interest rate applicable is 0.03% per day.

Ans: In case the margin in your account goes below the minimum required margin, you will not be allowed to buy any securities under MTF and Rupeezy will make a margin call. The position can be liquidated at any time when sufficient margins are not in place.

Ans: In such cases, the shares will be squared off on a T+1 basis.

Ans: You can activate MTF in simple steps from your trading account. An active demat and trading account is required to avail the MTF facility. You need to sign the MTF agreement, accept terms and conditions and transfer the initial margin amount or shares to your trading account. Read the terms of the agreement carefully and acquaint yourself with the process, charges etc.

Ans: Just as the profit potential is high when you invest with MTF funds, the risk of losses is also multifold. You may lose not just your capital but the borrowed capital as well. Investors are required to maintain a minimum balance in their trading account, failing which some of the shareholding may get liquidated to fulfill minimum balance.