Margin Trade Facility (MTF)
Margin Trading Facility (MTF) is a service that allows an investor to buy shares and securities using a small amount from his available funds/shares as collateral known as margin. The remaining balance required to complete the transaction is funded by the broker.
Benefits of MTF
- You can hold on to your equity delivery positions for long periods of time and avoid auto square off on T+5 days
- Utilization of securities available in Demat account by giving them as margins
- Allows you to leverage your cash and stock as margin thereby increasing your ROE
- MTF enhances the buying power thus investor can spread the portfolio across a variety of shares and securities. As a result of this diversification, the portfolio investment risk gets reduced