Glossary
What is MTF (Margin Trading Facility)? Meaning, Example & Why It Matters
A broker-funded facility that lets you buy shares for delivery by paying only part of the cost upfront.
Margin Trading Facility, or MTF, lets you buy eligible shares for delivery while paying only part of the purchase value. The broker funds the rest, and the shares you buy are pledged as collateral for that loan. You can hold the position beyond the trading day, sometimes for extended periods, as long as you maintain the required margin.
Why MTF matters to you
MTF comes with interest. You pay interest daily on the amount funded by the broker for as long as the position is open. Over weeks or months, this cost can be significant and can erode or wipe out returns, especially if the stock does not move as expected.
MTF also amplifies risk. If the share price falls, your losses are magnified relative to your own money, and you may get a margin call. If you cannot top up, the broker can sell the shares. Only SEBI-approved securities are eligible, and brokers set their own funding percentages within rules.
Practical tip: before using MTF, compare interest rates across brokers and calculate how much interest you would pay over your expected holding period. Treat it as borrowed money, and only use it if you understand that you can lose more than your initial investment.
Example: Illustrative only: if you buy shares worth ₹1,00,000 and pay ₹25,000 yourself, the broker funds ₹75,000. If the interest rate works out to roughly ₹40 per day on that amount, holding for 30 days would cost about ₹1,200 in interest before charges.
See it in rupees: every charge and tax on a real trade, at every broker. Open the brokerage calculator
Related terms
- GlossaryMargin
The money or collateral you must keep with your broker to take and hold leveraged positions.
- GlossaryPledge
Using shares or other securities in your demat account as collateral to get margin for trading.
- GlossaryDelivery Trading
Buying shares and holding them in your demat account beyond the trading day, for days, months or years.
Frequently asked questions
Is MTF the same as a loan?
In effect, yes. The broker funds part of your purchase, and you pay interest on that amount until you repay or sell.
Can I hold MTF positions for a long time?
Brokers allow holding MTF positions for varying periods, subject to margin and their policies. Interest keeps accruing while you hold.
What happens if the share price falls?
You may need to add funds to maintain margin. If you do not, the broker can sell the shares to recover its funding.