Buy Now. Pay Later. Enhance your buying power with our Margin Trading Facility.
Margin Trading Facility (MTF) provides you with additional leverage for trading, allowing you to buy up to 4x more shares than your available funds. By placing a small margin in cash or stocks as collateral in your Demat account, Kotak Securities funds the rest. With Pay Later (MTF), you only pay a fraction of the total trade value upfront, and Kotak Securities will cover the remaining. This facility helps you maximize your buying power and can also be used when you're short on funds. Simply put, buy shares now and pay later!
Let us understand this through an example.
Scenario:
Using Margin Trading Facility (MTF) with 4x Leverage:
If the stock price rises to ₹110:
If the stock price falls to ₹90:
You may also face margin shortfall requirements due to the drop in share value.
Quantity
MTF can be accessed with any of our brokerage plans, giving you the ability to boost your buying power. However, the Trade Free Pro Plan offers a lower interest rate. The good news is, you can start using MTF without any additional documentation! Simply accept the disclaimer, and you're ready to go.
Online Steps:
Offline Steps: To activate MTF offline:
Once you send the email, our team will activate MTF for your account and confirm the same over mail. You can then begin placing your orders using MTF!
We believe in quality first and a technology-led approach that makes us a reputable choice for investment advisors across the industry.
*Margin available up to 4x on 1000+stocks
Margin Trading Facility (MTF) is an exchange-approved product wherein individuals can purchase stocks by paying only the initial margin, with the remaining amount being funded by Kotak Securities Ltd. One can either keep the position open as long as they want or can take delivery of the stock.
Kotak Securities offers lower MTF rates of 9.75% per annum or 0.0267% per day, which are applied from T+1 day onwards on the Trade Free Pro Plan. These charges vary based on your selected brokerage plan.
With the introduction of the pledge model in September 2020, it has become mandatory to pledge stocks purchased under the Margin Trading Facility.To hold your MTF position for as long as you want, user are required to pledge the stocks purchased under MTF on T Day on the link received from NSDL.
Yes, there is a charge of Rs.20 + GST per ISIN for both pledging and unpledging.
In the event that you fail to pledge the stocks purchased under MTF, your position will be liquidated.
With Kotak Securities Ltd, once you have pledged your MTF stocks, you can maintain your position for as long as you wish, or you may choose to convert the position to cash.
To create an MTF position, you can utilise cash, existing stocks, and ETFs held in your Demat account as collateral, post-pledging.
Benefit: Leverage enables you to amplify returns on a smaller investment, as seen when paying only 20% upfront for a 10% return on the stock price, resulting in a 50% return, pre-cost.
Risk: However, it's crucial to note that leveraging also adds losses on a smaller investment. For example, paying only 20% upfront for a 10% loss on the stock price means you lose 50% of your capital, pre-cost. Understanding the risks associated with Leverage is vital for informed decision-making.
Benefit: Unlimited holding period allows you to hold a trade indefinitely if you believe it offers a better chance of making a profit.
Risk: Nevertheless, holding a trade for an extended period increases your interest costs, raising the breakeven for your trade. Additionally, if the trade moves against you, you may need to provide higher margins or face liquidation.
The creation of a MTF position against shares as collateral is now open to investors. SEBI and Exchanges keep a close eye on the securities that qualify for the MTF, and they periodically prescribe the margin that must be placed on such securities (either in cash or as shares of collateral).
A margin trading facility, such as MTF, can be powerful if you aim to maximize the potential of your business. This feature makes it possible to place more bets on the market than your account balance usually is able to allow, which can result in a higher profit margin by increasing purchasing power.
You may continue to own shares if you like and pay interest on the funding amount. MTF is only available to a couple of exchange-approved stocks, as opposed to Cash. In your app, this information is available on a stock detail page that relates to margin requirements.
The holding period on MTF with Kotak Securities is unlimited. This means that you can hold a stock for an unlimited number of days in MTF with Kotak Securities. Do note that interest charges will apply for the duration of the position, basis your pricing plan.