Margin Trading Simplified

Q: What is Margin Trading Funding (MTF)?

Margin Trading Funding is offered by the Broker to its customers to buy stocks with a minimum required margin (remaining amount will be funded by JM Financial Services Limited) and hold the stocks for 1 year by maintaining the required margin. Example: If a client wants to buy Reliance Industries shares worth Rs. 1,00,000 and the prescribed minimum margin (%) for Reliance is 25% then the margin amount to be paid by client would be around Rs.25000. The remaining amount of Rs.75000 would be funded by JM Financial Services Limited. A client can carry this funded position for 1 year. In case he wishes to take the delivery, then he just needs to repay the funded portion. Interest would be charged on the funded amount/Debit amount.

Q: What is the benefit of MTF?

A client can carry delivery position for 1 year, by paying only a small percentage of the securities value known as margin amount, instead of the entire value of securities. Example: A client having a margin of Rs.25000 can buy stocks worth Rs. 25000 under normal circumstances (CNC product). By availing this MTF facility, the client can now take larger exposure with the same limit of Rs. 25000. As mentioned in the example, the client can buy Rs.1,00,000 worth of Reliance Industries shares by bringing a margin of Rs.25000. He can also carry this position for 1 year.

Q: Which securities would be eligible for Margin Trading Funding?

Group I securities as specified by the SEBI would be eligible for MTF trading, subject to the restrictions by the RMS team. JMFSL has its own approved list of stocks out of the Group I stocks, identified by it based on various risk parameters.

Q: Is MTF required to be activated every time I use it?

No. You only need to activate MTF once, and the process is simple and quick.

Q: Is there an applicable limit under MTF?

Depending upon your trade you can up to 50% of the margin on your trade.

What is Margin Trading Facility

Margin trading funding enables traders to leverage their market positions beyond their own capital, providing increased buying power, flexibility for diversification, and the ability to profit from both rising and falling markets through short selling. Despite costs like interest on borrowed funds, competitive rates make margin trading a cost-effective strategy. It also aids risk management by allowing traders to hedge against losses or seize short-term opportunities without tying up all their capital