Swing Traders Pain for MTF (Margin Trading Facility) E-Margin

General
130

Who will decide how long you are able to pay?

Because it is their money and their responsibility to lend in a safe manner. When you lend to someone do you not ask what they are using it for?

If you tell bank that you are able to pay their monthly interest and return money after 1 year why do they not always give loan? Because it is risky and it is their money. They should bother.

131

They already have securities worth twice that amount which they can liquidate if i don’t pay, this is risk free for them they are already having haircut of 55% what else they want.

132

Brother they have tons of clients not just you. they cannot liquidate for everyone when market falls.

RBI’s imposed haircut is 50% I believe. So technically only 5% buffer is there, which can happen in a single day in the market. If it goes below 50% you have to topup within 7 days. You have to add funds then.

Just imagine what will happen when someone pledges HDFC stock and uses it to buy HDFC stock. It will be a vicious cycle.

133

will that be possible if i take with 70% haircut, then no problem should be there for anyone, even 55% haircut is too big. 20 % lower circuit in FNO stock is rare.

134

I need some money for swing trading and most of my capital is stuck for long term investment that i do not want to liquidate as i have good entry points.

135

It is a standard condition that you will find in all the general purpose loans. The intent is to protect borrower from losses and making defaults in the loan installments, lenders are anyways covered with the collateral.

This is the reason why there is no check from the bank/lender to ensure the compliance of this covenant.

Compare it with the warning for F&O trading, when we login to our trading account.

136

how is it possible to default when they are monitoring these securities everyday, an FNO security cannot crash 70% that much in a week, and they have a grace period of 7 days to add capital.
Is there any way i can get money for swing trading based on these securities.

137

I don’t think any bank / FI will lent you money for investing in stock market, as it miight be against the RBI guidelines.

For them, it’s like lending money for gambling.

138

then Stock market is gambling - i think RBI will accept - all bala bala bala

139

Then how does MTF works, will it allow for swing trading.

140

MTF is margin funding its not a typical loan, broker is paying on your behalf, plus the risk is managed by both broker and SEBI, by offering selected securities for MTF, with a cap of specified margin for each security.

141

I believe F&O stocks have no circuits right. If some fraud is discovered in the company it can easily fall to any amount.

image
image3181×1670 222 KB

Yes bank in 2018. -50% in few days time

Check PAYTM chart for something more recent. -70%

142

ok guys Thank you

143

Hi MTF is a risky one if that particular stock you bought dives down , one solution is to take loan on FD if you have one , Interest will be very Low !!

144

you can get 2 cr on same day itself as well

2 Likes
145

@aarki

  • Does it mean angel MTF works almost like a margin account (Margin Account: Definition, How It Works, and Example (investopedia.com))? If yes, that’s a great flexibility.
  • Can we also move money in-out freely as long as MTF requirements are satisfied? e.g.
    • 1 L in account - position taken for 1.5L and I want to deposit 50k to avoid paying any interest.
    • 1 L in account - position taken for 1L and I want to withdraw 50k for emergency expense and willing to pay interest on 50k.
1 Like
146

Sir …
I am using Zerodha since 2016…(wish to share my experience)
Before using Zerodha app, I used different Broker services (Big name & Brands) but found ALL HAD Hidden Charges, and i thought Hidden Charges is a TRUTH and accepted it …
One day i received call from Zerodha Executive, he told me that Delivery is free & Intraday is just 0.01%…I thought he is from a fraud company, but he said we are SEBI registered…I checked & found it SEBI Registered,…
When i used Zerodha app i found it is very user friendly & Charges were transparent & perfect…I call the executive & told him that no one can stop zerodha becoming Number One, due to its transparency in Charges,…he just laugh in disbelief…
My word came true and Zerodha became number 1…
Now the real point in writing this,…
From last few months customers are searching for MTF Facility & many Zerodha customers are moving toward Brokers who provide MTF…
Again i found the same hidden charges & No transparency with the Brokers providing MTF…
I wish Zerodha start MTF facility & all the customers suffering with hidden charges in MTF will run back to Zerodha…Hence request to to work MTF in Zerodha…
Thanks…
Zerodha customer

2 Likes
147

Yes, we are working on it.

5 Likes
148

There’s a quicko thread on this forum where the company keeps missing one deadline after another. This thread reminds me of that.
As I said earlier, I HOPE THE END PRODUCT & MTF RATE ARE WORTH THE WAIT.

3 Likes
149

Why does no one talk about margin shortfall in MTF?

At what %shortfall is MTF margin-call triggered?

I didn’t even see this in Kotak/mStock website. They are just promoting the upside scenario .