Margin Funding: Helping leveraged Investment

Margin funding

Rupeeseed firmly believes in the philosophy of Knowledge Sharing. In this blog, let us understand MTF product and its benefits. Undoubtedly , this is one of the business drivers for a broking firm


Rupeeseed Trading Platform is highly scalable and most reliable providing the best-in-class User Interface. Our products are highly evolving catering to different business needs. It takes immense proud to state that we are the first one to develop and offer Pre-Pledge Model for Margin Trade Funding (MTF) product to our esteemed clients.


What is MTF?

Margin Trading is a facility offered to an investor for buying shares with the available margin by allowing him to pay a fraction of the total transaction value called a margin. The margin can be given in the form of cash or shares as collateral. In short, it can be termed as leveraging a position in the market with cash or collateral by the investor. In this transaction, the broker funds the balance/remaining amount.


Features of MTF:

  • Investors who wish to avail the MTF need to undertake by signing/accepting additional Terms and Conditions. It ensures that investors are completely aware of the risk and rewards associated with it.
  • Allows investors to create leverage position in securities in delivery mode in equity segment
  • The positions can be created against the margin amount which can be in the form of cash or shares as collateral.
  • Positions created under MTF can be carry forwarded up to N of days as defined by broker.
  • Securities allowed under MTF are predefined by SEBI and Exchanges from time to time. Broker can define such list of scrips which are part of MTF trading.


How does Pre-Pledge Model of MTF work in Rupeeseed Trading Application?

  • Investor has to login to the trading portal and select the scrip/stock which you want to purchase as MTF
  • Enter the desired quantity and other details in the order form
  • The amount of margin available will automatically reflect on your screen
  • Pledge the selected stock before the order placement. The same will be driven through a pledge process as defined by the Central Depository Services Limited
  • Post successful pledge creation, proceed with order placement


Benefits of Pre-Pledge Model:

  • It ensures pledge is created by the client upfront. This would reduce the backend necessity of sending pledge request to client via email post market hours
  • Very Easy and Time saving as client would be able to create pledge online through front end application/trading portal without waiting for any mail from the broker
  • More importantly it reduces the instances of where in client takes the position as MTF but later does not pledge the shares intentionally or un-intentionally.


Pre Pledge MTF model have helped broking firms to scale up their offerings and generate good revenues.


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