What Is MTF? The Margin Trading Facility, Explained

The idea in one paragraph

Under the margin trading facility you pay only part of a share purchase yourself (the margin); the broker funds the rest and charges interest on it every day you hold the position. The shares stay pledged to the broker as security. If the price falls far enough that your margin no longer covers the required minimum, the broker asks you to add money or securities (a margin call), and if you don't, it can sell the shares (square-off).

How a trade works

1. Buy: you buy, say, ₹1,00,000 of shares, putting up ₹25,000. The broker funds ₹75,000.
2. Pledge: the shares are pledged to the broker through the depository.
3. Carry: interest runs daily on the funded ₹75,000, at the broker's MTF rate (commonly in the low to high teens per cent a year).
4. Mark to market: each day the position is valued at the close. If your equity (value minus the loan) falls below the required margin, a margin call follows.
5. Exit: sell to close (the loan is repaid from the proceeds), or convert to a delivery holding by paying the funded amount.

Which shares qualify, and how much margin

Only exchange-approved securities can be bought on MTF: broadly the liquid Group I stocks and those with derivatives, plus some ETFs. The minimum margin follows the exchange's own risk margins for each stock (VaR and extreme-loss margin), so a volatile stock needs more of your own money than a steady large cap. Every stock page shows the exchange's current margin rate for that stock.

Who limits the brokers

SEBI caps how much a broker can lend through MTF relative to its own net worth and borrowings, limits what it can fund the book with, and requires brokers to report every client's MTF position to the exchanges each day. The exchanges then publish, for every security, the shares held under MTF and the amount financed across all brokers. That disclosure is what this section is built on.

What the exchange numbers mean

Amount financed (the book)

The total value at which the open MTF positions were taken, across all brokers. It is not re-priced every day: it changes only when positions are opened or closed.

Fresh exposure

New MTF positions taken during the day.

Exposure liquidated

Positions closed during the day, by the client or by the broker.

Shares financed

How many shares of each security are held under MTF. Unlike the amount, this does not move with the price.

Because the amount financed reflects purchase values, dividing it by the shares financed gives the average price margin holders paid. Comparing that with the market price tells you whether margin holders in a stock are sitting on gains or losses. Flash Finance shows this for every stock and for the market as a whole.

The risks

• Losses are magnified. With 25% margin, a 10% fall costs you 40% of your money before interest.
• Interest drag. At 15% a year on a 75% loan, the position must rise about 0.9% a month just to break even.
• Forced selling. A sharp fall can bring margin calls and square-offs, often at the worst prices, and crowded stocks can fall further as many holders are sold at once.
• Concentration. Small companies with a large share of their free float on margin are the most exposed to that spiral: see most leveraged.

Reading this section

Start with the overview for the market book and flows, the screener to find stocks, stress & risk for how fragile the leverage is, and the calculators to cost a trade. Definitions are on the methodology page.