Margin Trading Funding (MTF) is a facility that allows investors to buy shares and securities from the funds and resources available. All that the investor needs to do is, pay a small amount of investment called margin, and get funding for the remaining amount. Investors can pay the margin in cash or by keeping shares as collateral depending on the availability.
Pay a Small Initial Margin to Buy Stocks and Repay Balance Amount in 90 Days
Sell your shares at any time during the quarter
Pledge existing shares as collateral to pay margins
Pay a nominal interest rate on outstanding amounts.
1. What is Margin Trading Funding (MTF)?
Margin Trade Funding Facility offered to investors and traders allows them to enhance their buying power. They can boost their investment in stocks and securities by paying just a small amount of the total investment value. You can buy stocks by putting your money partially while the rest of the amount will be funded by the broker.
Clients can give margin either in cash or by keeping shares as collateral.
2. What are the benefits of MTF?
MTF comes with the following advantages:
3. How is interest calculated?
Interest in MTF is calculated on the amount funded considering the number of days for which you are holding the position in MTF. The number of days considered starts from the exchange pay-in date for settling a particular transaction till the dates funds are received. Interest in MTF is charged daily including the non-working days as well.
Example: Suppose you bought stock worth 100,000/- Under MTF.
Your Money 25,000
Margin Limit 75,000
Interest Paid on 75K per day = Rs 36.98
4. Can the MTF facility be used to fund intraday trades?
No, Margin Trading Funding Facility does not give the facility of intraday trading.
5. What if you fail to maintain the required margin?
If you are availing of the MTF facility from a SEBI registered broker you will be required to maintain a minimum balance in your trading account. In case you fail to maintain the required balance your stockbroker holds the right to close all your open positions in order to bring in the minimum value. This is also referred to as liquidation or forced sales.
6. How can you avail MTF facility?
You can avail MTF facility at RMoney by following any of these simple steps
Email: You can write us a mail at firstname.lastname@example.org from your registered email id asking us to activate the MTF facility on your trading account.
Website: You can visit our official website www.rmoneyindia.com
Go to the MTF page from the products drop-down menu and share a lead with us
Call: You can either call your dealer or can call our customer care executives at 0562-4266600/7188900
7. Am I required to hold separate Demat Accounts to avail Margin Trading Facility?
No, you don’t need to hold separate Demat Accounts to avail of the MTF facility
8. What will happen if the shares kept as collateral for MTF appreciate?
In case the shares kept by you as collateral appreciate your margin from collateral stocks will be increased. You can thus use the same for creating more positions under the MTF facility.
9. I bought stocks under MTF. What if they get appreciated? Will I be eligible for an additional margin in that case?
No! You will not get any additional margin in case the stocks bought by you under MTF appreciate.
10. How will the dividend received on collateral stocks be treated?
The dividend earned on collateral stocks will be credited to your registered bank account.
11. Who all can avail of the MTF facility?
All the clients of RMoney can take the benefit from the MTF facility.
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