Categories: Business Wire India Technology

Margin Trading Facility: How SAMCO Securities Can Help Investors Leverage the Benefits of MTF

Business Wire India

Margin Trading Facility (MTF) empowers investors to amplify their purchasing power, enabling them to acquire securities beyond their current funds through broker-provided borrowing. By using MTF, investors can increase their exposure to the market and potentially amplify their returns. As of January 2024, the margin trade funding (MTF) book for the stockbroking industry has surged to Rs. 54,537 crore, marking a substantial leap from Rs. 29,500 crore recorded in January last year and a significant jump from about Rs. 7,100 crore in February 2020.¹

This remarkable growth, as revealed by data compiled by ratings firm ICRA, underscores the evolving landscape of investment strategies within the market. Margin trade funding, a practice where retail investors leverage brokers' funds by paying 25%, has reached an all-time high this week, coinciding with the broader market's ascent to unprecedented heights.

"The surge in margin trade funding can be primarily attributed to the remarkable performance of the market, particularly in mid- and small-cap stocks, enticing more retail investors to participate in margin trading," explained Nilesh Sharma, Executive Director & President of SAMCO Securities. "Historically, margin funding has been synonymous with bull markets, as retail investors strategically position themselves for substantial market upswings through leveraged positions.”

What is MTF and How Does It Work

MTF is a facility offered by some brokers that enables investors to buy securities by paying only a fraction of the transaction value, called the margin. The margin can be paid in cash or in the form of shares as collateral. The broker covers the remaining amount as a loan and charges interest on it on a daily basis. The securities bought using MTF are pledged to the broker until the investor settles the loan.

For example, suppose an investor wants to buy shares worth Rs. 10 lakh, but has only Rs. 1 lakh in account. They can use MTF to buy the shares by paying Rs. 1 lakh as the margin and borrowing Rs. 9 lakh from the broker. In this case, they have used 10x leverage on your initial investment, i.e., they have multiplied their potential profits by ten times by increasing your order size (from Rs. 1 lakh to Rs. 10 lakh).

However, investors also have to pay interest on the borrowed amount, which will reduce your net profit.

How SAMCO Securities Can Help You Use MTF Effectively

SAMCO Securities is one of India's leading investment technology companies that offers a variety of securities to trade and invest in, such as stocks, equity derivatives, currency derivatives, commodities, mutual funds, and IPO. SAMCO Securities is known for its ultra-low brokerage, unique margin products, and free trading software.

SAMCO Securities offers MTF under the product category called E-Margin, wherein you can create a position both on NSE and BSE exchange. Some of the features of SAMCO Securities' margin trading are:

SAMCO Securities offers the lowest margin for futures trading, as you only have to pay the exchange margin requirements.
SAMCO Securities provides 4X leverage on 1000+ stocks, which enhances your equity delivery buying leverage with unlimited holding period.
SAMCO Securities allows you to get margin against your shares for your intraday and positional trades, which enables you to do zero balance trading.
SAMCO Securities offers a unique engine that analyses your past trades and shows you hidden insights from your trade performance, such as your personal index, fund manager comparison, and market sentiment.

To start using MTF with SAMCO Securities, investors need to open a demat and trading account online and sign the additional terms and conditions for margin trading. They can also download the SAMCO app, which gives them access to advanced features such as live option greeks, futures open interest heat maps, FII DII insights, and upgraded TradingView charting.

"Margin trading facility enables our clients to leverage their capital and diversify their portfolio. It allows them to take advantage of market opportunities with minimal upfront investment and flexible holding period. Margin trading facility is not a gamble, but a skill that requires discipline, analysis, and strategy. At SAMCO, we provide our clients with the best MTF trading platform, with advanced tools, low interest rates, and a wide range of stocks. MTF trading is not just a feature, it’s a value proposition that differentiates us from the rest,” adds Nilesh Sharma, Executive Director & President of SAMCO Securities.

MTF can help investors leverage the benefits of the market movements and increase their returns. However, margin trading also involves certain risks and requires careful management of the margin account. SAMCO Securities can help investors use MTF effectively by offering low brokerage, high leverage, and insightful features.

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