How does the Margin Trading Facility work?

The Margin Trading Facility (MTF) is offered by brokers, allowing investors to leverage their capital by up to five times the share's value for investments. This enables you to buy stocks by paying only a fraction of the total price, while the broker funds the remaining amount. You are charged interest on the amount borrowed. You can invest in more than 1000 stocks with MTF Facility with Torus, view the Eligible Stock List Click here.


Example Scenario:
Let’s say you have ₹5000 in your trading account, and the stock you wish to buy is priced at ₹5000 per share. If the stock qualifies for a 3x margin in MTF, you can buy up to 3 shares with your ₹5000. Here’s how it works:
- Total cost for 3 shares: ₹5000 × 3 = ₹15,000 
- Your contribution (margin): ₹5000 (33.33%)
- Amount funded by the broker: ₹15,000 (total) - ₹5000 (your margin) = ₹10,000 (66.67%)
- Interest will be charged on the ₹10,000 funded by the broker at a rate of 0.05% per day.

Top Benefits of MTF:

- You can get up-to 5 times leverage
- Competitive interest rates starting at just 0.05% per day .
- You can hold shares bought with MTF for as long as you wish.

Eligible Stocks for MTF

Only stocks classified as Group-A securities under SEBI regulations are eligible for MTF. The list of approved stocks may change from time to time and will be updated on our TFM website. You can view the current list of eligible stocks on the platform. You can invest in more than 1000 stocks with MTF Facility with Torus.

Step-by-Step Guide to Applying for MTF

MTF is activated during your account onboarding process, and if you are an existing client, you will find an option to opt for MTF when buying a stock in the mobile application.

Log in to Your Account :
Open your Torus Digital account through the mobile app. 

Navigate to Stock Module :
Go to the stock module from the main menu.
 
Select the Stock :
Choose the stock you wish to purchase. 

Choose the MTF Option :
Select MTF and enter the quantity of the stock you wish to buy.
 
Place the Order :
Click "Buy" to confirm the MTF order. 

MTF Pledging :
After placing the order, you will receive a pledge request by 5 PM. You must accept it by 9 PM on the same day for the order to be valid. If you do not accept the request, the shares will be squared off on T+6 day.

What are the interest charges?

The interest rate on the amount funded by the broker is 0.05% per day (18% annually). The charges are applied starting from the day after the transaction (T+1) and continue until the position is cleared. Interest is calculated everyday but billed weekly and will appear in your ledger at the end of each week.
Introductory Offer: As part of a limited-time offer, the interest rate is reduced to 0.032% interest per day (12% p.a.) until March 2025.
Example Scenario:
Let’s say you have ₹5000 in your trading account, and the stock you wish to buy is priced at ₹5000 per share. If the stock qualifies for a 3x margin in MTF, you can buy up to 3 shares with your ₹5000. Here’s how it works:
Total cost for 3 shares: ₹5000 × 3 = ₹15,000 
Your contribution (margin): ₹5000 (33.33%)
Amount funded by the broker: ₹15,000 (total) - ₹5000 (your margin) = ₹10,000 (66.67%)
Interest will be charged on the ₹10,000 funded by the broker at a rate of 0.05% per day.

How is the margin Calculated?

The margin required for MTF depends on two factors: the Value at Risk (VAR) and the Exposure Limit Margin (ELM) for each stock.

• For each stock, the margin is calculated as VAR + 5 × ELM
  

Example of Margin Calculation:
Let’s assume a stock is priced at ₹400 . The margin requirement for this stock is calculated as VAR + 5 × ELM

• VAR: 7% 
  
• ELM: 5%
  

Now, let’s calculate the margin requirement:
Margin = VAR + (5 × ELM)
Margin = 7% + (5 × 5%) 
Margin = 7% + 25% = 32%
If you have ₹400 as margin in your trading account and a stock requires a margin of 32% of its market price, you can calculate the number of shares you can buy as follows:
Number of shares = ₹400 (margin available) ÷ 32% of the stock’s market price.
For example, if the stock’s market price is ₹400, the margin required per share would be 32% of ₹400, which allows you to buy:
Number of shares = ₹400 ÷ ₹400 × 32% = 3.125 shares (approximately 3 shares).
This means with ₹400 in margin, you can purchase up to 3 shares of this stock.