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Does m.Stock offer MTF for an Unlimited Number of Days?
Contrary to popular opinion, you don’t need large sums of money to trade or invest in the stock market. Many stockbrokers offer a unique facility known as Margin Trading Facility (MTF) that allows traders and investors to purchase stocks even with limited capital. Interested in getting to know more about MTF? Here’s a comprehensive guide on what margin trading in the stock market is and how m.Stock’s offering is better compared to the industry standard.
What is a Margin Trading Facility (MTF)?
Margin Trading Facility, also known as eMargin, is a facility offered by many stockbrokers to their clients. Using this facility, you can purchase shares by simply paying a percentage of the total trade value. The remaining amount will be funded by the stockbroker offering this facility.
Since you’ve essentially borrowed money from your broker, you will have to pay interest at a specified rate till the time you decide to repay. Also, as additional security against default, the stockbroker will create a pledge on the shares you bought as collateral.
Here’s an example to help you understand what eMargin trading is and how it works.
Assume that you wish to purchase 100 shares of Reliance Industries Limited. Currently, the share price is ₹2,500. This would mean that you need about ₹2,50,000 to purchase 100 shares of the company. Unfortunately, you don’t have the requisite amount that you need to execute this trade.
Therefore, you decide to use the eMargin facility of your stockbroker. Assuming your broker provides 75% funding in Reliance Industries Ltd., you can buy stocks worth ₹2.5 lakh against ₹50,000 in your trading account.
The shares purchase under MTF (eMargin) are pledged with the brokers. m.Stock is one of the only broker in India that offers a pre-pledged faciltiy where shares are first pledged and then the purchase order goes to. Now, since m.Stock charges one of the lowest interest rates of 9.99% per annum for funding below ₹25,00,000 lakhs, because your funding amount is ₹2.5 lakh you will pay 9.99% interest rate which comes to 0.027% per day.
Does m.Stock Offer MTF for an Unlimited Number of Days?
Usually, most stockbrokers have a set limit on the holding period of stocks purchased through the eMargin facility. For instance, let's say that the maximum holding period of MTF stocks is 365 days. In this case, you can hold these stocks only for that number of days. Once you reach the holding limit, you will have to sell the stocks and repay the outstanding balances along with interest to your broker.
Here’s where m.Stock’s eMargin facility comes into the picture. Unlike other stockbrokers, m.Stock does not have a limit on the holding period of MTF stocks. This effectively means that you can hold the stocks you purchased via this facility for an unlimited number of days.
The Benefit of MTF Holding for an Unlimited Number of Days
Now that you know that m.Stock offers an unlimited MTF holding period, let’s take a look at how it benefits you.
Since there’s no limit on the holding period, you can continue to have the MTF stocks in your portfolio up until the day you decide to sell it off provided you make interest payments and meet margin calls, if any. Unlike other brokers, m.Stock will not force you to liquidate your MTF stocks on account of reaching the holding period limit.
With this, you must now be aware of what Margin Trading Facility is and how it can help you purchase shares even when you’re falling short of funds. As you can see, m.Stock’s eMargin facility is one of the best in the industry.
In addition to an unlimited holding period on MTF stocks, m.Stock also levies some of the lowest interest rates on borrowed funds. Furthermore, you get up to 80% funding on more than 700 mtf stock list. m.Stock offers all of these benefits and more without levying any subscription or hidden brokerage charges whatsoever.