What is MTF in Stock Trading?

MTF (Margin Trading Facility) allows investors to buy shares by paying only a portion of the total purchase value, while the broker funds the remaining amount. For example, 

• Suppose an investor wants to purchase shares worth ₹1 lakh through MTF. 
• If the required margin is 25%, the investor would need to provide ₹25,000.
• The broker would finance the remaining ₹75,000.

The funded amount attracts interest or financing charges. Additionally, the shares purchased via MTF are subject to applicable margin and collateral requirements. 

If the share price falls and the required margin is no longer maintained, the investor may have to provide additional funds or securities. If the requirement is not met, the broker may sell/ liquidate the position according to its terms and applicable regulations.

Note that MTF increases the size of a position relative to the investor’s own capital, so both potential gains and potential losses are larger relative to that capital.

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