Margin Trading Facility (MTF) is a product offered by SEBI-registered stockbrokers that allows investors to purchase eligible equity shares by paying only a portion of the total trade value upfront — with the broker financing the remaining amount at an agreed interest rate. Under MTF, the purchased shares are pledged as collateral with the broker until the outstanding funded amount is repaid. SEBI mandates that investors contribute a minimum margin of 50% of the trade value (20% in cash and the rest in approved securities), while the broker funds the remaining 50%. Brokers charge interest on the funded portion — typically ranging from 12% to 18% per annum depending on the broker and the tenure of funding. MTF positions can be held for extended periods (unlike intraday MIS positions that must be squared off the same day), making it suitable for investors who wish to hold delivery positions with leverage. In India, MTF is available on a SEBI-approved list of securities that meet specified liquidity and market capitalisation criteria. While MTF amplifies gains when share prices rise, it equally magnifies losses when prices fall — triggering margin calls that require the investor to either top up their margin or face forced liquidation of pledged shares by the broker.
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