Sahi MTF: Margin Trading Facility, Charges, Eligibility & Process

Sahi MTF, or Margin Trading Facility, allows eligible customers to purchase supported securities by paying part of the transaction value while financing the remaining amount through the broker, subject to applicable terms and regulatory requirements.

MTF can increase the purchasing power available to an investor. Instead of paying the full value of an eligible transaction upfront, the investor provides the required margin and the remaining amount is funded under the applicable MTF arrangement.

However, leverage also increases risk. A decline in the value of the purchased securities can result in larger losses relative to the investor's own capital. Investors should understand the costs, margin requirements, and risks before using MTF.

How Sahi MTF Works

Under MTF, an eligible investor selects a supported security and chooses the applicable margin-trading product while placing the order.

The investor provides the required margin, while the broker funds the remaining eligible amount according to the applicable MTF terms.

For example, if an eligible purchase has a total value of ₹1,00,000 and the applicable margin requirement is 40%, the investor may need to provide ₹40,000 while the remaining ₹60,000 is funded under the facility.

The actual margin requirement depends on the security, regulatory rules, market conditions, and current Sahi terms. The example is for illustration only and does not represent a guaranteed or current Sahi funding ratio.

Sahi MTF Eligibility

MTF is available only for eligible customers and supported securities. Investors may need an active Trading and Demat Account and must meet the applicable broker and regulatory requirements.

Not every stock or security is necessarily eligible for MTF. The list of eligible securities can change based on regulatory requirements, broker policies, liquidity, volatility, and other factors.

Customers should check the MTF eligibility displayed on the Sahi platform before placing an order.

Sahi MTF Charges

MTF involves costs in addition to the normal trading expenses. Investors should consider brokerage, interest or funding charges, statutory taxes, exchange charges, and other applicable fees.

The funding cost is particularly important because the financed amount can remain outstanding until the position is closed or otherwise settled according to the applicable terms.

The exact Sahi MTF interest rate and charges can change. Investors should verify the latest pricing schedule before using the facility.

Sahi MTF Interest

Interest or funding charges may apply to the amount financed through MTF. The cost can depend on the amount funded and the period for which the position remains financed.

For this reason, holding an MTF position for a longer period can increase the total cost of the trade.

Investors should calculate the expected funding cost before entering a position and compare it with the potential return.

Sahi MTF Margin Requirements

Margin requirements determine how much of the transaction value the investor must provide. These requirements can vary by security and may change according to market conditions and regulatory requirements.

If the value of securities used as collateral falls, the available margin can decrease. The investor may then be required to provide additional funds or securities to maintain the required margin.

Customers should monitor their MTF positions regularly rather than assuming that the initial margin requirement will remain unchanged throughout the holding period.

Sahi MTF Risks

MTF involves leverage and therefore carries greater risk than purchasing securities entirely with the investor's own funds.

If a security purchased through MTF declines, the investor remains responsible for the financed amount and applicable charges. A sufficiently large decline can result in a substantial loss of the investor's own capital.

There can also be margin-call or position-liquidation risks. If required margin levels are not maintained, the broker may take action according to the applicable MTF terms and regulatory requirements.

Investors should therefore avoid using MTF without understanding how leverage, funding costs, margin requirements, and market volatility affect their positions.

Sahi MTF vs Regular Delivery

With a regular delivery purchase, an investor generally pays the full transaction value and holds the securities without borrowing through an MTF facility.

With MTF, the investor contributes the required margin while the remaining eligible amount is financed. This can increase purchasing power but also introduces funding costs and additional risks.

Regular delivery may therefore be more appropriate for investors who do not want the additional risks and financing costs associated with leverage.

How to Use Sahi MTF

Eligible customers can generally follow these steps:

1. Log in to the applicable Sahi trading platform.
2. Select an MTF-eligible security.
3. Choose the applicable MTF product or order option.
4. Review the required margin and applicable funding charges.
5. Enter the required quantity and order details.
6. Confirm the transaction after reviewing all costs.
7. Monitor the position and required margin regularly.

The exact process may vary according to the current Sahi platform and MTF terms.

Before using MTF, investors should check the latest eligible-security list, funding charges, margin requirements, brokerage, and applicable terms.

Overall, Sahi MTF can provide eligible investors with additional purchasing power for supported securities. However, leverage can magnify losses and create funding and margin obligations. Investors should understand the complete cost structure and risk involved before using Margin Trading Facility.