uTrade AlgosMTF or Margin Trading Facility is a service offered by Share India that allows investors to buy shares by paying only a part of the total transaction amount upfront, while the remaining balance is funded by Share India. This facility helps investors enhance their purchasing power, enabling them to take larger positions in the market using leverage.
MTF is available only for select approved securities and comes with a predefined interest rate on the borrowed amount. The purchased shares are held as collateral by Share India until the investor clears all outstanding dues.
How MTF Works?
Illustration 1: Basic Use of MTF
- Mr. Arjun wants to buy shares worth ₹1,00,000 but has only ₹50,000.
- He opts for Share India’s Margin Trading Facility (MTF).
- With a 50% margin requirement, he contributes ₹50,000 from his own funds.
- Share India funds the remaining ₹50,000.
- Shares worth ₹1,00,000 are purchased and held as collateral by Share India.
- Mr. Arjun is charged interest on the borrowed ₹50,000 until it is repaid.
Illustration 2: Proposed Use of MTF
- Total investment via MTF = ₹1,00,000 (₹50,000 own + ₹50,000 borrowed)
- Share price rises by 10%, making the investment worth ₹1,10,000
- Market Gain (10% Increase): ₹10,000
- Interest charged by Share India = ₹500
- Net Profit: ₹10,000 – ₹500 = ₹9,500
- Return on Investment: ₹9,500 return on ₹50,000 investment = 19% return (Compared to only a 10% return without leverage)
Note of Caution: The above examples are for illustrative purposes only and are intended to help explain how Margin Trading Facility (MTF) works. In real market conditions, outcomes may vary significantly. While MTF can potentially enhance prospects in favourable market conditions, it also carries the risk of magnified losses during downturns. Investors are strongly advised to evaluate their financial goals, investment horizon, and risk appetite before opting for leverage-based products like MTF.
Benefits of MTF
- Enhanced Buying Power: Take larger positions with limited upfront capital.
- Flexibility: Maintain positions without needing full capital immediately.
- Strategic Investment: Allows for timely market entry when opportunities arise.
Risks to Consider
- Magnified Losses: Just as prospects and purchasing power can be amplified, so can losses in a falling market.
- Interest Cost: Interest on the borrowed amount can hamper your financial goals.
- Margin Calls: If the value of securities drops, investors may need to deposit additional funds to maintain their margin.
- Liquidation Risk: Failure to maintain the required margin can result in the forced squaring off of positions.
- Market Volatility: Leveraged positions are more sensitive to market fluctuations, increasing risk exposure.
How to Activate MTF with Share India?
If you already have a trading account with Share India and wish to activate the Margin Trading Facility (MTF), you can do so easily online through our website.
To activate MTF, visit:
If you face any issues or need any support, you can contact the Share India support team via email at support@shareindia.com or by phone at 1800 203 0303.