MTF(Margin Trading Facility)

[nithin]

@VenuMadhav

Thanks for your feedback. One can have endless debates about how much one should charge, even in the above threads, there’s request for 12.5, 12 If it was 12.5, questions would be why can’t it be 11.5, in line with what our NBFC charges as rate of interest for loans availed. The comparisons can be endless.

We believe what we’re charging is fair, and reflects the value of the service we provide.

To add to what @VenuMadhav said, it is charging enough to cover the overnight risk. With LAS (Loan against security), the haircut is 50%; that is, you can borrow only 50k for pledging stock worth 1lk. The risk is lower, and hence, we charge around 11.5%. In the case of MTF, you can trade something worth Rs 1lk with as low as Rs 20k in your account. The risk for us is much higher hence we charge ~15.7% (0.04% compounded daily).

[Joe_Chris]

Soon traders will demand zero interest under Pradhaan Mantri MTF yojna

[agrawal_prateek]

@VenuMadhav

If you have enough cash, you can convert your MTF position into a delivery position.

Thanks @VenuMadhav for quick response. Converting to delivery is an option but I am suggesting an option to reduce the trigger price of the stock by adding some amount to that particular trade. This option is generally used by the investors, where they don’t want to convert to delivery but don’t want their holding to be squared off because of a sudden down move and investor expects the stock to move up in few days.

I am attaching a snapshot of ICICI direct open position for your reference. Observe that

1. Same stock purchased on different dates is treated as a different transaction and have different trigger prices.
2. There is option to add margin thereby reducing the borrowed money from the broker and thereby reducing the trigger price. ( This is the option that I was suggesting)
3. There is also option to convert to delivery.

This way every transaction can be managed individually and hence reduce the MTM calls from the broker as people can manage it otherwise one has to manage it on the portfolio level.

Pardon me if I have quoted in a wrong way , I am new to the platform.

[VenuMadhav]

@agrawal_prateek

Same stock purchased on different dates is treated as a different transaction and have different trigger prices.

We’ve built our system the same way.

@agrawal_prateek

There is option to add margin thereby reducing the borrowed money from the broker and thereby reducing the trigger price. ( This is the option that I was suggesting)

Ok, I now understand what you’re asking. You want the ability to partially pay for the MTF purchase, thereby reducing the funded value. This is not something we’ve accommodated for in the current system. We will have to build a system that allows users to voluntarily apportion a portion of their free funds towards MTF segment to cover for a part of the funded amount. I don’t know if there’s a real world use case for this. We will evaluate and see if this needs to be provided.

[agrawal_prateek]

@VenuMadhav

I don’t know if there’s a real world use case for this. We will evaluate and see if this needs to be provided.

Thank you for your response. But there is a use case which is to manage the market volatility and avoiding MTM calls. Also we should consider investors who want to have a full control of every purchase under MTF not just the whole MTF combined as basket.

With Zerodha now people have expectations that it’s system would be better than others and I am afraid we are behind other existing brokers in case of MTF.

[agrawal_prateek]

I also understand that this is something which Zerodha can not implement immediately but whenever you evaluate this please consider reverse as well i.e when the Stock went down I added extra cash to the particular MTF transaction to avoid Square-off now when the stock came up I should be able to withdraw the cash added thereby again increasing the funded value by broker and increasing the trigger value at which the the stock would be squared-off. This helps in freeing up the cash for other purchases.

This is not present with any of the brokers and Zerodha can be the first one to introduce this feature.

[pyarlath]

It would be good if we can have some educational blogs,videos,playlist on this topic for new traders, before rolling out the features…

[Trader_123]

Funny to see you asking for 12.5 % on another thread and asking me to chose a different broker for the same comment . Be happy with 15.7 % now !

[Ankit_Jain3]

@nithin

Can I buy liquidbees etf with mtf and pledge those liquidbees for margin in f&o ?

[Joe_Maxpayne]

i believe people who use mtf are traders not investors as this is leveraged, one bad day can wipe out ones capital if mtf position is naked.

so from traders point of view 15% interest is too high, any premium collected from fno side against mtf position will be paid mostly for mtf interest.

[nithin_kumrr]

@Ankit_Jain3

Can I buy liquidbees etf with mtf and pledge those liquidbees for margin in f&o ?

@Ankit_Jain3 No, debt like instruments are not eligible for MTF, and you will not receive collateral for MTF pledges.

[Vishal_k86]

Stocks or ETF purchased through MTF have to be pledged on same day, so it’ll not be available in your holding to pledge again.

[Abhi_001]

Great to see that MTF Beta is finally released, congratulations to Zerodha team

[Abhi_001]

@agrawal_prateek

Lets make Zerodha a best MTF solution providing platform.

This is difficult to achieve, as the MTF interest rates are far too aggressive.

[tanwarrht]

Is beta still open?
How long it takes to activate beta once one expresses interest?

[siva]

@tanwarrht

Is beta still open?
How long it takes to activate beta once one expresses interest?

Will take couple more weeks to open for all, but if you want yo can register to participate in beta.

[tanwarrht]

I have registered to participate in beta, how long will it take to activate so that i can use MTF as stock delivery.

[tanwarrht]

@siva It has been more than a week i registered but no response till now.

[tanwarrht]

Can you please arrange it again?

[siva]

@tanwarrht

Can you please arrange it again?

Can you DM me your id?