Yes, intraday only but brokerage is charged as per MTF.
If user want 2x leverage then they can buy less stocks, both will have the same output.
For example if 4x leverage is available, user with 10k can buy 40k worth, say if price is 100, user will get 400 shares, imagine if stock moved by 5% then value will go to 42k, on initial sum of 10k this is 20%.
Now consider another case where user want less leverage, only 2x, in this case they can just buy less shares, maybe buy 200 shares with 10k, only 5k will be blocked as you get 4x leverage and 5k will be free cash.
Using ATO for MTF order punching for a while. A very good and innovative feature introduced by Zerodha. Not much relevant for CNC traders but still worth it.
What happens when an MTF buy order is short-delivered?
If an MTF (Margin Trading Facility) buy order is short-delivered, the pledging confirmation will fail on T+1 due to the absence of holdings. The position will then be converted to CNC (Cash and Carry) holdings and settled either through cash or available holdings after the auction.
@siva Any update on this? Sort of a buzzkill that Zerodha takes a long time to implement usage of pldeged margin, even options buying was added after a while. I donāt see how any serious trader would be keeping cash (and losing 6% interest) and then paying the 12% for MTF and still thinking it is a good trade.
Beg to differe here - if we pledge liquidbees, how is it a high leverage trade? If anything Zerodha with its very slow timelines (Iām almost 100% sure being a long term user of Zerodha that this wonāt even be done in 2 months) is costing MTF traders 14% + 6% of LB return. Sigh! If only Zerodha was quicker, would have shifted here way earlier, as the services is tiers above other brokers.
How 14% can be saved? if user pledged for ex 10k worth and took mtf using that, take 5x leverage so 50k worth, in this case user will be charged interest on 50k , I got it that no extra cash is required though.
If regulator allows getting full delivery margin which is usable for buying Cash holding qty, why is MTF not allowed if same is also done for holding (overnight position)?
In simple terms, both are delivery-based trades, just an order type change at Broker (CNC / MTF).
For MTF, i understand there is a settlement of T+1, so MTF selling margin cannot be used to buy MTF on same day, but this is delivery margin from CNC sale.
I find it hard to grasp the logic from regulator.
I would be happy to read where regulator has explicitly restricted this.
These regulations were formed back in the day when systems werenāt aligned and operated the way they do today. Technically, thereās no risk since the earmarking of securities for sale happens near real time. However, the rules need to be changed, and brokers have already approached the Exchanges to bring about this change to allow credit against delivery sale to be utilized as margins for MTF trades. Matter of time. Till then, unfortunately allowing the use would mean being non compliant.
