MTF Trading: Margin Trading Facility

Margin trading is a special form of trading that enables investors to purchase securities with borrowed money from their broking service provider. The investor’s securities... Margin trading is a special form of trading that enables investors to purchase securities with borrowed money from their broking service provider. The investor’s securities act as collateral for the loaned amount (margin). At Anand Rathi Private Client Group (PCG), we specialize in Margin Trading Facility (MTF) for High Net-worth Individuals (HNIs) and Ultra High Net-worth Individuals (UHNIs). The margin trading facility is a system that allows users to leverage funds, meaning that you can take control of added funds and manage significant trades. At Anand Rathi PCG, we enable investors to get the maximum out of their investments by availing leverage on their investing amount. We provide the facility of marginalized trade capital and you can use this margin amount to leverage the increased potential gains. See More See More

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Key Features of Margin Trading Facility (MTF)

Leveraged Investment

The benefit of having MTF trading for HNIs and UHNIs is that you can trade more stocks with your existing capital. This inflates your profitability while managing the probabilities of risk.

Interest-Only on Used Margin

The interest is only charged on the marginal amount used to finance the trading position. This is quite different from charging interest on the total value of the particular trade.

Less Paperwork

MTF activation is easy and can be done via simple web OTP verification. It eliminates any complicated documentation involved in trading practices and improves the overall trading experience.

Wide Range of Scrips

MTF at Anand Rathi PCG offers margin trading for a large number of stocks, ensuring investors have a wider range of trades.

Collateral and Funded Stocks

The MTF trading facility relates to funded stock (stock purchased with borrowed money) and collateral stock (stock placed as security for the margin). The dissimilarities between the two help control risks and monitor used margins.

Flexible Trading Duration

For the purpose of MTF shares, investors can even have an infinite holding period – if they can meet the margin call and have adequately managed their accounts.

How Does Margin Trading Facility Work?

Margin Trading Facility (MTF) allows the investors to trade in stocks on margin, thus the investors borrow money in order to finance the stock purchase. Here’s how it works in more detail:

Margin Requirement

The margin requirement (as a percentage of the total amount of intended stock purchase) is calculated right from the onset when you start an MTF trade. For instance, if the price of stock is ₹2000 per share, the margin requirement is 25%, you can use ₹500 per share as margin money.

Borrowing Margin from us

The investors pay 75% of the value of the stock while we provide the other 25 percent, thus you only need to pay a small fraction of the amount required initially.

Interest on Borrowed Funds

The interest on the funds borrowed for margin trading is calculated on a daily basis and you only pay interest on the funds applied.

Repayment and Collateral

During the trade, it is important to keep the margin levels as it is needed to sustain the given type of trade. You may be required to contribute extra cash to the margin if the stock price goes in the other direction of your position or else your position will be squared off.

Margin Call

The acquisition of the securities that are in your portfolio is every time below the required margin, you will receive a margin call and you will have to put down more money for securities. Otherwise, you will face the risk of your positions being squared off automatically.

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How to Avail Margin Trading Facility at Anand Rathi PCG?

At Anand Rathi PCG, it is easy and convenient for you to avail of our Margin Trading Facility. Here’s how you can avail the MTF trading facility:

Get access to your trading account with us

Before you can begin trading or investing, you have to get access to your trading and Demat account with Anand Rathi PCG. This can be done online by the use of our simple and instant registration process.

Submit Documents

By submitting your essential documents such as identity proof documents, address proof documents, and other financial documents, get your account opened with us. Then go ahead to get your MTF activated.

MTF Activation

By verifying the code sent to your registered phone number, you can get confirmation of your MTF account activation via our simple online activation process, required for using the MTF in the share market facility.

Fund Your Account

Ensure that you put down some of your funds in your margin trading account. Depending on your margin, you will be in a position to purchase stocks under our MTF facility.

Start Trading

Choose scripts from the list of approved shares, and then you can place your buy orders in your MTF account. The margin required for each trade will be displayed on the platform.

Monitoring and Managing Your Position

Our online trading platform allows you to view your margin, and stock price and trade your MTF investment directly. Ensure that your required collateral meets margin calls.

Benefits of Margin Trading Facility

Increased Investment Capacity

MTF enables you to trade an increased number of stocks using smaller capital than required, hence improving your chances of getting higher returns.

Additional Exposure on Existing Stocks

HNIs and UHNIs can use their current stocks to obtain further access, which boosts their profitability of trades.

Corporate Benefits

When using the margin facility, you still enjoy any resulting dividends, stock splits, or any other corporate actions on the specific stocks.

Interest on Only Utilized Margin

You are asked to pay interest on your balance only on the marginal amount you choose to borrow. The remaining funds are free from any accruing of interest.

Easy Online Activation

Our platform activates MTF in the share market instantly without the need for physical paperwork or visiting our branch.

Enhanced Liquidity

Since MTF enables more people to participate in the market with relatively less capital, it offers better liquidity.

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Documents Required for MTF

To avail Margin Trading Facility, our HNI and UHNI investors need to submit the following documents to Anand Rathi PCG for verification and compliance purposes:

Identity Proof

Any government-issued photo identification - Aadhaar card, passport, voter ID, etc.

Address Proof

Address verification documents such as electricity bills, bank statements, or rental agreements

Income Proof

Tax returns, pay stubs, or bank statements

Bank Account Details

Canceled cheque or bank statements for the linking of the MTF trading account

Signed Agreement

Hardware leasing agreement that states the conditions of service provision under the margin trading facility

FAQs on Margin Trading Facility

What is the Interest Rate of the Anand Rathi Margin Trading Facility?

Our MTF Facility base rate of interest is 12%. Our clients can pay as low as a 22.5% margin and avail of facilities like carry forward funded position for unlimited days and trade in our exhaustive list of stocks. The rate is charged on a daily basis and the interest is charged only on the money borrowed from the client.

What is the Pledging of Shares under MTF?

In Margin trading, you provide your existing shares as security for a loan to be used in trading. This leads to a healthy margin for you and the opportunity to buy more stocks on the basis of borrowed capital. This process is known as the pledging of shares under MTF.

What is the maximum margin HNIs can get at Anand Rathi PCG?

Business or financial transactions can obtain a margin limit of up to ₹5 Crore based on net worth value and permission only.

Does Anand Rathi PCG offer a Margin Trading Facility for retail investors as well?

Having evaluated that, yes, Anand Rathi Securities does provide MTF services to even the retail and the HNI category of investors. However, these margin limits may also vary according to the investor type and their risk tolerance level.

How long can I hold MTF shares?

You can keep the shares bought under MTF for as long as you want, subject to the going margin and how well you respond to margin calls.

What type of collateral for MTF is required?

Collateral may consist of cash stock, or both depending on the quantity defined by the margin on the specific trade.

What if I fail to pledge the stocks I bought under MTF?

Our common practice is to square off of your position to recover the borrowed fund if you do not pledge stocks under MTF.

Are there any charges for pledging and unpledging?

Yes, Anand Rathi may even charge minimal charges for pledge and unpledge under MTF facility.

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