5paisa, the discount broker offers Margin Trading Funding (MTF). With this facility, the client can buy the stock by partially putting his own money and the rest being funded by the broker. The MTF facility is available for delivery trading where you can carry a delivery position for 90 days. 5paisa offers up to 3.5x margin for delivery trading with an interest of 18% PA on borrowed money.
Let’s understand MTF with an example:
Suppose you want to buy shares of the ABC company worth Rs 1 lakh. With MTF, you need to pay Rs 25K and rest you can loan from 5Paisa. Assume price move in your favor in the next 3 months by 5%, you get a profit of 1625 or 6.5% on your return after interest. See below how it is calculated:
|Interest 18% pa for 90 days||3,375|
|Sold @ 5% appreciation||1,05,000|
|Return in 3 months||6.50%|
5paisa accept cash, cash equivalent or Group 1 Equity Shares as initial margin. Client needs to maintain a proper margin in case of shortage. MTM losses are considered as shortage and need to be paid by the client.
For new customers, this is taken care in consent form during account opening. If the account is opened before 01/08/2018, you need to accept MTF term online after reading all the terms and conditions.
MTF is available for all equity scripts that are traded in derivatives segment or futures trade. MTF position can be held for a maximum 90 days period.
5paisa as a stockbroker charges 18% interest on the money paid by the broker.
Last updated on 19th May 2019