How m.Stock’s MTF (eMargin) benefits your trades
How many times has it happened that you had to let go of a lucrative trading opportunity simply because you did not have adequate capital? Multiple times, right? Well, you no longer have to miss out on money-making opportunities as m.Stock’s Margin Trading Facility (eMargin) will eliminate all of your funding woes. What is m.Stock’s Margin Trading Facility and how does it benefit your trades? Let's find out.
What is Margin Trading Facility (eMargin) and how does it work?
Margin Trading Facility (MTF) or eMargin is an exchange-approved delivery funding product where the broker, in this case m.Stock, provides funding against capital available (known as margin) in your trading account. In exchange for this funding, the broker charges interest and the shares purchased are pledged with the broker for the duration of the holding period. So, MTF essentially allows investors to undertake higher value positions with only a fraction of the total transaction value.
Let us understand how MTF works with an example. Say you want to buy 1,000 shares of ITC Ltd. trading at ₹335.45 on 29th December 2022. To buy 1,000 shares you will need a capital of ₹3.35 lakhs. However, you only have ₹67,000 in your trading account. In a normal scenario you will not be able to take up this position. But when you avail m.Stock’s eMargin facility, m.Stock will loan you the balance ₹2.68 lakhs. With this you will be able to buy 1,000 shares of ITC ltd. worth ₹3.35 lakhs with just ₹67,000 in your trading account. This is how MTF (eMargin) works and helps you boost your trading potential. In exchange for this funding, your broker i.e., m.Stock will charge interest on the funding value. MTF interest rates in the industry can go as high as 24% p.a. But m.Stock offers up to ₹10 crore funding at lowest interest rates of 7.99% p.a. The below table shows the three eMargin interest rate slabs charged by m.Stock basis funding value.
| Funding Value | eMargin Interest Rate (p.a.) |
|---|---|
| Up to ₹25 lakhs | 9.49% |
| Above ₹25 lakhs | 7.99% |
In the above example, since the funding amount is up to ₹25 lakhs, the interest charged will be 9.49% p.a. So, assuming you hold this position for 6 months, your eMargin interest will be ₹12,734 (₹2,68,360*9.49%/2).
How does MTF (eMargin) benefit your trades?
Apart from the obvious funding benefit, eMargin can help you multiply your gains. How? Let us relook at the earlier example of ITC Ltd. Assume that the stock price appreciates by 25% in the next 6 months. So, it goes from ₹335.45 to ₹419.31. In this case, the value of your investment will also grow to ₹4.19 lakhs, generating a gain of ₹83,862. Even after accounting for the ₹12,734 interest amount, your net gain will be ₹71,129. Without eMargin you could have bought only 200 shares (on a capital of ₹67,000) and your gain would be restricted to ₹16,772. By using the eMargin facility, you multiplied your gains by ~4.25 times. So, with eMargin, your return on capital is 106% whereas without eMargin it is just 25%. This is the magic of the eMargin facility.
| With MTF | Without MTF | |
|---|---|---|
| ITC Ltd. share price | ₹ 335.45 | ₹ 335.45 |
| No of shares purchased | 1000 | 200 |
| Self-funding | ₹ 67,090 | ₹ 67,090 |
| m.Stock funding | ₹ 2,68,360 | ₹ 0 |
| Total trade value | ₹ 3,35,450 | ₹ 67,090 |
| Stock appreciation | 25% | 25% |
| Appreciated stock price | ₹ 419 | ₹ 419 |
| Total sale proceeds | ₹ 4,19,310 | ₹ 83,862 |
| eMargin interest | ₹ 12,734 | ₹ 0 |
| Net gains | ₹ 71,126 | ₹ 16,772 |
| Return on capital | 106% | 25% |
Why you should avail m.Stock’s eMargin facility
While multiple brokers offer MTF, m.Stock’s eMargin stands a cut above rest not just in terms of interest rate charged but also on the following parameters. Here is a comparison of what makes m.Stock's eMargin facility stand apart from others in the industry.
| Sr. No | Features | m.Stock | Industry |
|---|---|---|---|
| 1 | Interest Rate | One of the lowest interest rates starting at 7.99% p.a. Even the maximum interest charged is capped at as low as 9.49% p.a. | MTF interest rates go as high as 18% - 24% p.a. |
| 2 | Funding (%) | You get up to 80% funding with m.Stock | The funding amount is restricted to 20-70% |
| 3 | No. of scrips | MTF facility is available for more than 700 stocks | MTF facility is available in 200-900 stocks |
| 4 | Holding Period | With m.Stock, there is no restriction on holding your eMargin position. You can hold your stocks for as long as you want | Most brokers restrict holding period to 365 days only |
| 5 | Subscription charges | There is no subscription charge. It is free for m.Stock Demat account holders | Subscription charges go as high as ₹10,000 - ₹20,000 |
| 6 | Pledging | m.Stock is India's first brokerage firm to introduce the concept of pre-pledging of stocks. This way you avoid the penalty incurred when you forget to pledge the stocks in required time | You get to post-pledge your stocks. You get the pledge authorisation link after you place your buy order. A lot of the time investors miss on the pledge request and are either required to pay the entire trade amount upfront or their position is squared-off, resulting in them missing out on lucrative opportunities |
| 7 | Pledge Charges | m.Stock charges one of the lowest pledging charges of only ₹12 per pledging request | The average pledge charge can go as high as ₹29 per pledging request |
| 8 | Brokerage Charges | When you avail eMargin facility under m.Stock’s Zero Brokerage account, no brokerage is levied on your eMargin trades | Typically brokers charge both brokerage as well as subscription fees, which increases the effective interest charged |
You can use our MTF calculator to calculate interest savings on your eMargin trades.
With so many stellar benefits, m.Stock’s eMargin facility can truly revolutionise your trading potential. So, stop waiting for a windfall or lottery to get adequate capital. Instead opt for m.Stock’s Zero Brokerage account and boost your trades with our eMargin facility at lowest interest rates of 7.99% p.a. across 700+ stocks.
