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Learn MoreMargin Trading Facility
What is Margin Trading Facility (MTF)?
Margin Trading Facility (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.
As an illustration
Your Account Balance = Rs. 25,000
MTF gives you upto 4x buying power = Rs 100,000 (25,000 x 4)
Thus, your enhanced Buying Capacity is now = Rs. 125,000.
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 happens if the margin is less?
In order to buy stocks under Margin Trading Facility, you need to fulfil the Minimum Margin requirement.
If your margin is less than that, then you will have to add funds to proceed with your transaction.
What is the interest rate charged for using MTF?
A standard interest rate of 0.041% per day (14.97% per annum) is charged on the borrowed amount.
How long can I hold the stocks purchased via MTF?
In case you have pledged the shares, you can hold them as long as you want unless you either sell your Pay Later (MTF) positions or convert them to delivery by adding funds.
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.
What is MTF Pledge?
As per SEBI guidelines, your shares bought using PayLater(MTF) will be automatically pledged. There is no action needed from your end
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:
If there is a margin shortfall, shares will be squared-off 4 trading days after the shortfall has occurred.
What are the charges for Pledging/Un-pledging shares under MTF?
When you raise a request to Pledge or Unpledge your shares, charge of Rs 20/- plus GST is levied per scrip.
How is MTF Pledge different from Margin Pledge?
Margin Pledge means using your existing holdings / portfolio to get additional limit / margin. You can then use this additional margin for Equity Intraday, futures & options writing (equity and currency F&O).
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 Futures & Options, Currency, or Commodity segment?
No. MTF Facility is applicable for trading in equity shares only.
I do not want to use Margin Facility. What should I do?
If you do not wish to use Margin facility you can place orders using Delivery product type.
Kindly make sure that you have adequate funds before placing your Order.
Kindly check your available funds in the Account -> Trading Balance Summary
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