What is MTF? A Simple Explanation for Investors
What is MTF? A Simple Explanation for Investors
Blog Article
If you’re looking to enhance your stock market investments, you might have come across the term MTF. Let’s break down what is mtf and how it can be useful for traders and investors.
What is MTF?
MTF stands for Margin Trading Facility — a service offered by stockbrokers that allows investors to buy stocks by paying only a portion of the total value upfront. The broker funds the remaining amount, effectively lending you money to purchase more shares than your current cash balance would allow.
In short, when you ask what is MTF, the answer is:
It is a way to leverage your capital in the stock market by borrowing funds from your broker to boost your purchasing power.
Key Features of MTF
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Leverage: Buy more shares with less upfront capital.
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Extended Holding: Unlike intraday trades, MTF positions can be held for days, weeks, or even months (subject to broker policies).
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Eligible Stocks Only: SEBI-approved and broker-listed stocks are available for margin trading.
Example of MTF in Action
If you want to buy shares worth ₹1,00,000 and your broker offers 50% margin, you only need ₹50,000 — your broker funds the rest ₹50,000.
Things to Keep in Mind
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Interest Cost: You pay interest on the borrowed amount.
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Risk Management: While profits can be higher, losses can be magnified too.
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Margin Calls: If stock prices fall, brokers may ask you to add more funds (called a margin call).