What is MTF pledge and its process?
MTF stands for Margin Trading Facility. It is a funding facility where the broker lends money to the investor to buy stocks in exchange for interest on the borrowing amount. The shares bought under MTF are pledged with the broker as a security. This is known as MTF pledge.
The standard MTF and MTF pledge process is as follows:
You shortlist the stock you wish to buy
You avail funding (MTF) from your broker to undertake the required position
As per the funding provided by the broker, you will have to maintain the balance required margin amount
You buy the stocks
CDSL will send an email and SMS by 9 pm on the same day with a link to pledge the stocks
Enter details of your Demat account or PAN (Permanent Account Number) and select the stocks you want to pledge
Enter OTP and approve the pledge request.
That’s it! Your shares will be pledged with the broker
Now the problem with this system is that in case you fail to pledge the stocks within the required time period, your position will be converted into delivery, and you will have to pay the entire trade value on T+2 days. If you fail to deposit the required funds even on T+2 days then your position will be carried forward till T+7 days and then eventually squared-off. To avoid this, m.Stock has introduced an industry-first ‘pre-pledge’ facility where the shares are pledged prior to placing the buy order. So, there are no chances of an investor forgetting to pledge shares and face penalty. And that’s not all. With m.Stock’s MTF (eMargin), you get up to 80% funding in 700+ stocks at one of the lowest interest rates starting @7.99% p.a. Plus, they do not charge any brokerage on your MTF trades when you open a Zero Brokerage account. So, if you are looking to trade big with MTF without having to pay big, then m.Stock’s eMargin is the ideal choice.