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What is MTF?
Margin Trading Facility (MTF) is a service that enables you to purchase shares by paying only a portion of the total cost. The remaining amount is funded by Shoonya, and interest is charged on this funded amount.
Example scenario
Let’s assume you have ₹100000 in your trading account, and you want to buy a stock priced at ₹1000 per share. If the stock qualifies for 2 times margin in MTF, you can buy up to 200 shares with your own fund ₹100000.
Here’s how:
- Total value of 200 shares: ₹1000 × 200 = ₹200000
- Your contribution (the margin you pay): ₹100000
- Amount funded by Shoonya: ₹200000 (total BUY value) - ₹100000 (your contribution as a Margin) = ₹100000
Shoonya will fund ₹100000, and you’ll be charged ₹49/day for every slab of ₹100,000 taken as MTF.
Interest calculation:
If you sell the stock after holding the position for 10 days, the interest calculation for the funded amount (₹1000) would be as follows:
- Daily interest: ₹100000 × ₹49/day for every slab of ₹100,000 taken as MTF = ₹49 per day
- Total interest for 10 days: ₹49 × 10 = ₹490
After 10 days, you would pay ₹490 in interest for holding these 200 shares using MTF.
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