What is Margin Trading Facility ?
A Margin Trading Facility or margin funding is an exchange-approved, leveraged product offered by broking companies to its investors. Margin Trading Facility or MTF is our hallmark product introduced to enhance an investor's stock buying power.
Margin funding allows you to buy stocks approved by the exchange in the equity cash segment by paying a small upfront margin. In other words, a margin trading facility allows an investor to buy more shares than he can with his available account balance.
What are some key advantages of Margin Trading Facility ?
- Increases your stock buying power (for delivery trades) in the equity cash segment.
- Become an active participant in a company’s growth story by just paying the margin.
- Make the most of the price movement over the medium term.
- Enjoy a hassle-free borrowing experience.
- Margin funding is available across approved shares and is a SEBI-regulated and exchange-approved product.
How Does the Margin Trading Facility Work ?
Margin Trading Facility is a facility offered by the brokerage company to investors, allowing them to buy more company shares by paying a small upfront margin.
This margin is only a small percentage of the total purchase value, with the remaining portion of the purchase value being funded by the brokerage company against a predefined interest rate.
For example, let us say you wish to buy shares of XYZ LTD company for INR 1,00,000. You don’t have ready capital to invest INR 1,00,000. You can check the margin provided by the broker for this company’s stock. Let’s assume the broker allows you to buy shares of this company by paying an upfront margin of 25%*, that is, Rs 25,000, with the balance of Rs 75,000 funded by the stockbroker on your behalf.
*Margin % varies from script to script from time to time.
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Key features of MTF
Buy more with limited funds
Enhance your buying power by upto 4 times
Go cashless
Use approved shares as a margin to make the best use of opportunities in the market
Exclusive Handpicked research
Our dedicated research team develops short- to medium-term stock ideas to help you make the most money
FAQ's
How much margin do I need to pay to buy my favourite stock?
The margin you must pay to buy your favourite stock using the MTF is not a fixed percentage. It depends on several factors, like the specific stock, the current margin percentage we offer, etc. Other factors considered are market conditions, volatility and risk assessment, regulatory guidelines, etc.
Which stocks are eligible for MTF, and what are the holding periods?
The stocks eligible for MTF are usually on a list of exchange-approved stocks. These stocks typically belong to the Group 1 securities as classified by SEBI. You may contact our customer support team for holding periods to get the most up-to-date list.
What happens if the value of my MTF-funded stocks falls below the required margin?
If the value of the stocks bought by you on the Margin Trading Facility falls below the required margin, it triggers a margin call from us. In this case, you must deposit additional funds or securities into your trading account to return the margin requirements to the mandated level. Suppose you fail to meet the margin call within the stipulated timeframe; in such a case, Mirae Asset Sharekhan has the right to liquidate a portion of your holdings to cover the margin shortfall. This forced selling can happen even if you don’t want to sell at that price, potentially leading to further losses. Therefore you must monitor your positions regularly to avoid such situations.
