MTF (Margin Trading Facility) is a service that allows an investor to purchase shares and securities from available capital by paying a fraction of the overall transaction value (margin). Depending on the investor's availability, the margin may be offered in the form of cash or shares as collateral. In today's flog we are going to take a look at the most frequently asked questions about MTF trading. So, let's begin.
The client availing the Margin Trading Facility will have to pay interest as per policy on the funded part.
If the Bought stock falls below the buying price, then appropriate top-up (MTM Loss) shall be paid by the client to maintain the ratio of 50%-50%.
Yes, if any corporate action takes place on the collateral, then brokers are obliged to pass it to the client. Like Dividends, bonuses, Split, etc.
No. MTF is a facility extended by Stock Broker only for the Equity Cash Segment.
Yes, to the extent of margin/collateral available to Broker provided by the client.
In case the margin falls below the minimum required margin, the Client shall not be allowed to buy any securities under MTF. Stock Broker shall make the Margin Call and will liquidate at any time when sufficient margins are not in place or make initiate the action as per the arrangement between Broker and Client.
Example: If client bought Reliance of Rs. 1,00,000/-; then Client needs to pay only 50,000/- and balance Rs.50,000/- shall be funded by Stock Broker.
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