What is MTF?

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.
 
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 
- Amount funded by the broker: ₹15,000 (total) - ₹5000 (your margin) = ₹10,000 
- Interest will be charged on the ₹10,000 funded by the broker at a rate of 0.05% per day.

To know more about MTF charges, click here