Using Margin Trading Facility (MTF) , an investor can buy shares using a small amount from his available funds/shares as collateral known as margin. The remaining balance required to complete the transaction is funded by the broker.
The margin can be given in the form of cash or shares as collateral depending upon the availability with the respective investor. In short, it can be termed as leveraging a position in the market with cash or collateral by the investor. In this transaction the broker funds the balance amount.
Till last year MTF was allowed against the cash margin not against shares as collateral. Now Securities Exchange Board of India (SEBI) has relaxed the said criteria vide its circular no. SCIR/MRD/DP/54/2017 dated June 13, 2017. Investors are now allowed to create a position under MTF against shares as collateral as well.
SEBI and Exchanges monitor tightly the securities eligible under the MTF and margin required (through cash or shares as collateral) on such securities are prescribed by them from time to time. Currently, the securities forming part of Group 1 securities are included in MTF.
#HOW TO ACTIVATE MARGIN TRADING FACILITY (MTF) IN ASTHATRADE ?
Our system is very simple. In our trading platforms Asthatrade Wave (mobile application) and AERO (Browser based application), when you place an order you have to select product type as MTF.IS ALL DONE IF I PLACE ORDER UNDER MTF? IS THERE ANYTHING ELSE, THAT I NEED TO DO ?
It is not enough if you just place an order in MTF. You will be required to make a pledge on the stocks that you had bought. This is as per the revised SEBI policy on MTF. According to the revised policy, even stocks bought under MTF has to be pledged to be considered as MTF position. Else, it will be allocated to your Normal CM segment. Once you buy stocks at MTF, they will be uploaded in Backoffice and a here is what is to be done once you buy shares under MTF. A forward Pledge request will be created for the shares bought and intimated to you vide an email and SMS. It may be noted that SEBI requires the Funded Stocks also to be Pledged. You will now be required to accept the Pledge request by clicking on the link received on the email / SMS by the end of T+1. In case, you do not receive the Email or SMS use the below given link to accept pledge request https://eservices.nsdl.com/mrg Your stocks will reflect under MTF funded position if you accept the pledge else, it will be considered as stocks bought in Normal Cash segment without having sufficient funds. The shares in such case will be transferred to Client Unpaid Securities Account (CUSA) as per policy and you will have 6 days time to clear the debit or time till the MtoM loss hits the stipulated level whichever is earlier.#WHAT ARE THE BENEFITS OF MTF?
If Client’s outstanding dues in normal trading a/c stand beyond T7, SEBI rules debars further exposure until such dues beyond T7 is cleared by client. Under MTF, clients can avail the funding for longer periods subject to fulfillment of maintenance margin and other conditions. Further, MTF will command lower margin as compared to margin applicable for Loan against Shares.
Cost of availing the facility is only 0.041% per day (Annualized cost – 14.99 %)on the daily ledger balance.#What are the Margin Requirements?
All positions under MTF (existing/potential) shall attract upfront Initial Margin (IM) prescribed by ACS from time to time.#What is a Group I security?
Stock Exchanges periodically publish the list of Equity shares under Group I/II/III as per SEBI Master circular no. SEBI/HO/MRD/DP/CIR/P /2016/135 dated December 16, 2016. NSE Approved securities list#Can I give stocks as margin to trade in MTF?
Yes, you may.#How I transfer stocks as collateral for MTF?
As per the revised SEBI guidelines, you need to pledge the stocks that you would like to give as collateral for MTF. To place pledge request ,please visit asthatrade.com,you will find Pledge Request Option under MENU option ,alternative click the link https://backoffice.asthatrade.com/NsdlPledge login and identify the stocks from your holdings list which you would like to place under pledge and submit as per the self explanatory process. Requests received before 3pm on a given day will be accepted at the EOD Once the Pledge Initiation process is completed at our end, you will receive a SMS from NSDL as seen below, to your registered mobile number# Will I get dividend and other Corporate action on my shares in Collateral a/c ?
Dividend amount, if any, will be credited to your MTF Trading A/c (i.e. M A/c) on receipt of the same from the company in our Bank A/c. Other corporate action benefits (like bonus, split) will also be added/split to your holdings on receipt of the same from the company in our collateral a/c.Can I do Margin Trading at Derivative segment?
No. As per the SEBI Norms,MTF facility is for the Equity Segment only.Do I get a separate contract note for Normal trades & Margin Trades?
No. But the trades under MTF need to be distinctly identified. So, for all other purposes, the trades are executed at the Exchanges in a single UCC and all levies including STT shall be levied as per single UCC.# What is the Brokerage applicable for MTF?
Brokerage slab shall be the same as applicable to Normal Trading Account.# Do I need to maintain the required margin at all times for the MTF?
Yes.# What will happen if I fail to maintain required margin at all times?
In case margin fall below the minimum required margin, you will not be allowed to buy any securities under MTF and ACS shall make a Margin Call and the position can be liquidated at any time when sufficient margins are not in place.