WHAT IS MTF (MARGIN TRADING FACILITY)?

What is MTF (Margin Trading Facility)?

What is MTF (Margin Trading Facility)?

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margin trading facility (MTF) is a service offered by stockbrokers that allows investors to buy stocks by paying only a part of the total trade value. The remaining amount is funded by the broker, essentially functioning like a loan for stock market trading.






How MTF Works


Let’s say you want to buy ₹1,00,000 worth of shares, but you have only ₹25,000. With MTF, you can pay ₹25,000 (your margin), and the broker will fund the remaining ₹75,000. You’ll then pay interest on the borrowed amount until you square off the position or add more funds.






Key Features of MTF

































Feature Details
Margin Requirement Usually 20–50% depending on the stock
Interest Rate Varies by broker, typically 12–18% annually
Tenure Can range from T+7 days to 90 days
Eligible Stocks Only selected stocks are allowed (MTF list)
Risk Level Higher due to leverage and market volatility






Pros of MTF




  • Leverage: Trade bigger with limited funds.




  • Flexibility: Maintain positions for a longer period.




  • Opportunity: Benefit from short-term price movements.







Cons of MTF




  • Interest Cost: Can eat into profits if not managed well.




  • Market Risk: Losses can be magnified due to leverage.




  • Margin Calls: You may need to add funds if stock prices fall.







Who Should Use MTF?


MTF is ideal for experienced traders who understand market risks and want to capitalize on short-term opportunities. It’s not recommended for beginners due to its complexity and risk.

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