Educational guide
Margin Trading in India — MTF, Leverage & Risk
MTF lets you buy delivery shares with broker-funded leverage. The interest cost makes it suitable only for high-conviction short-duration trades.
// how mtf works
You pay 25–50% margin upfront, broker funds the rest. Shares are pledged with the broker as collateral. Position can be held for any duration as long as MTM losses are within the haircut buffer.
// costs
Interest: 0.04–0.07% per day (14–25% p.a.). DP, pledge unpledge and brokerage charges apply separately. A 30-day MTF hold at 18% p.a. silently costs ~1.5% of trade value — kills the trade math unless return exceeds that hurdle.
// risks
Margin call risk: if collateral value drops, broker can square-off without further notice. Interest accrues regardless of profit or loss. Concentration in MTF positions amplifies downside materially.
// frequently asked questions
No — SEBI publishes a list of MTF-eligible stocks (typically large-caps in the F&O segment). Penny stocks and illiquid mid-caps are excluded.