What is Margin Trading Facility (MTF)?
Have you ever missed a good trading opportunity just because you were low on funds at that moment? If you had Margin Trading Facility (MTF) this would have never happened. MTF allows an investor to buy a stock by paying just a fraction of the total transaction value. The balance amount is funded by the broker (such as Angel One). You can avail up to 4x of your buying power via MTF.
Say for instance
Your Account Balance= 25,000
MTF gives you upto 4X buying power= 1,00,000 (25,000 x 4)
Thus, your enchanced Buying Capacity is now= 1,25,000
Simply put – even though you have only Rs 25,000 in your account, you can still trade up to Rs 1,25,000. How awesome is that!
What would you do with increased Buying Power?
Increased Capacity to Trade, Affordable Interest Rates, Super Convenient Process— Margin Trading Facility is a real gift for the interested investor. Here is a starter kit to help you get more out of your buying power.
What is MTF Pledge?
An important step of availing MTF is completing the Pledge Request. This is a mandatory process introduced by SEBI. When you buy shares under Margin Trading Facility, you have to pledge those shares to continue holding the position. This process must be completed by 9:00 pm on the same day. In case you fail to do so, your shares will be squared-off on T+7 day.
Here’s how you can complete your MTF Pledge Process:
Once your MTF request is approved, check your Email/SMS for communication related to MTF Pledge Request Initiated
Click the CDSL link in the Email/SMS (You will be redirected to CDSL’s website)
Enter PAN/Demat Account Details
Select Stocks to Pledge
Enter received OTP to Authorize and complete the Process
So that’s it: Margin Trading Facility can transform the way you trade. Just remember a few critical details, and follow the process to fully enjoy this unique facility.
Margin Trading Facility (MTF): Dos & Don’ts
Remember to Pledge your shares purchased under MTF within the stipulated timeline, ie: before 9:00 pm on the day of purchase.
Trade wisely. Opt for MTF after doing your homework and ensuring that the trade is right for you.
Don’t ignore any Margin Shortfall. In case of Margin Shortfall the shares will be squared-off 4 trading days after the shortfall has occurred.
Don’t forget that MTF is a kind of a loan. Hence you are liable to pay interest on it. An Interest rate of 0.049% per day (18% per annum) is charged on the borrowed amount.
Frequently Asked Questions
What is Margin required?
Margin required is the amount you need to pay initially to buy stocks under margin products. Margin amount can be paid either in the form of Cash, or by pledging your holdings (margin pledge).
What is the Interest rate charged for MTF?
An Interest rate of 0.049% per day (18% per annum) is charged on the borrowed amount.
How long can I hold the stocks purchased via MTF?
You can hold your positions under MTF as long as you maintain the required margin in your account.
When will I start incurring interest charges?
Interest is levied from the 2nd day onwards after you placed an MTF trade, till the outstanding amount is cleared, and/or your position is squared-off.
When would my shares purchased under MTF be squared-off?
For shares purchased under MTF, square-off will be triggered in either of the below scenarios:
– You need to pledge the shares purchased under MTF, before 9pm on the day of purchase. If you fail to do so, your shares will be squared-off after 7 trading days.
– If there is a margin shortfall, shares will be squared-off 4 trading days after the shortfall has occurred.
What is the deadline to complete the MTF Pledge Process?
You need to pledge your respective shares by 9 pm on the same day. In case you do not pledge your shares, the same will be squared off on T+7 day.
What are the charges for Pledging/Un-pledging shares under MTF?
When you raise a request to Pledge or Un-pledge your shares, charge of Rs 20/- plus GST is levied per scrip
Will I be allowed to take fresh positions in Margin Trading if I have not pledged my previous positions?
You can take fresh positions in Margin Trading, as long as you are able to provide sufficient Margin.
When will I receive the Pledge Link For my Margin Trading positions taken today?
Once your request for MTF is approved, you will receive the link from CDSL on the same day. Please check your Email/SMS for communication related to MTF Pledge Request Initiated.
How is MTF Pledge different from Margin Pledge?
Margin Pledge: Margin Pledge means using your existing holdings / portfolio to get additional limit / margin. You can then use this additional margin to buy more shares.
MTF Pledge: As per SEBI guidelines, shares bought under MTF have to be compulsorily pledged. This is called MTF pledge. Unlike Margin Pledge, you do not get additional limit against these shares.
Can Margin Trading Facility be used for trading in F&O, Currency, or Commodity segment?
No. MTF Facility is applicable ONLY for trading in equity shares.
Margin Funding as subject to the provisions of SEBI Circular CIR/MRD/DP/54/2017 dated June 13, 2017 and the terms and conditions mentioned in rights and obligations statement issued by the Angel One Ltd.