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Choice Broking Margin Trading Facility (MTF) allows investors to enhance their buying power by funding equity delivery trades with partial margin. It offers up to 4X leverage, competitive daily interest rates, and flexible holding benefits. Through MTF, investors can take larger positions while efficiently managing capital under a SEBI-regulated framework.
Example Calculation (4× Leverage)
Let’s understand how Margin Trading Facility (MTF) works with a practical example. You want to buy shares worth ₹10,00,000 (around 666 shares at ₹1,500 each). However, you have only ₹2,50,000 in your account.
Scenario 1: Stock Price Rises
If the stock price increases by 20%:
New value: ₹12,00,000
Profit: ₹2,00,000
After deducting interest on the funded amount (₹7,50,000), your net profit will be slightly lower (depending on the number of days you hold the position).
Without MTF, with ₹2,50,000, you could buy only around 166 shares, and your profit at a 20% rise would be approximately ₹50,000.
| Type of Charge | Details |
|---|---|
| Interest | 18% per annum |
| Leverage | Up to 4X |
| Brokerage | ₹20 per executed order or 0.02% (whichever is lower) |
| Pledge Charges | ₹30 + GST per request |
| Unpledge Charges | ₹30 + GST per request |
| Segments | Equity Delivery |
Following are the steps to place MTF buy order through Choice Broking:
|
Pros |
Cons |
|
Up to 4X buying power |
0.058% daily interest |
|
Suitable for short-to-medium holding |
Margin calls possible |
|
Equity delivery leverage |
Only cash segment allowed |
|
Clear MTF tagging |
Cannot convert to Intraday/Delivery |
|
SEBI-regulated structure |
Requires DDPI/POA |
Choice Broking Margin Trading Facility (MTF) is suitable for investors seeking enhanced exposure in equity delivery trades with limited capital. With up to 4X leverage and a transparent 18% annual interest structure, it provides flexibility and capital efficiency. However, since leverage increases both profit potential and risk, disciplined monitoring and proper margin management are essential.
Information on this page was last updated on Wednesday, May 22, 2024
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