Acumen Capital Market India(Ltd)

Margin Trading Facility (MTF) is a facility offered to an investor in buying of shares and securities from the available resources by allowing him to pay a fraction of the total transaction value called a margin. The margin can be given in the form of cash or shares as collateral depending upon the availability with the respective investor. In short, it can be termed as leveraging a position in the market with cash or collateral by the investor. In this transaction the broker funds the balance amount.

Till last year MTF was allowed against the cash margin not against shares as collateral. Now Securities Exchange Board of India (SEBI) has relaxed the said criteria vide its circular no. SCIR/MRD/DP/54/2017 dated June 13, 2017. Investors are now allowed to create a position under MTF against shares as collateral as well.

SEBI and Exchanges monitor tightly the securities eligible under the MTF and margin required (through cash or shares as collateral) on such securities are prescribed by them from time to time. Currently, the securities forming part of Group 1 securities are included in MTF.

FAQ ON MARGIN TRADING

WHO CAN AVAIL MARGIN TRADING FACILITY?

Margin Trading Facility (MTF) is extended to existing clients who are active for trading NSE. However NRI clients

shall not be eligible for MTF.

WHAT ARE THE BENEFITS OF MTF?

If Client’s outstanding dues in normal trading a/c stand beyond T7, SEBI rules debars further exposure until such dues beyond T7 is cleared by client. Under MTF, clients can avail the funding for longer periods subject to fulfillment of maintenance margin and other conditions. Further, MTF will command lower margin as compared to margin applicable for Loan against Shares.

For example, if you buy ACC worth Rs. 1,00,000, it will command a margin of Rs.25,000 i.e. @ 25% and the rest will be funded by ACML subject to terms and conditions.

WHAT IS THE RATE OF INTEREST FOR MTF?

Cost of availing the facility is only 0.0576% per day (Annualized cost – 21% ) on the daily ledger balance .

What are the Margin Requirements?

All positions under MTF (existing/potential) shall attract upfront Initial Margin (IM) prescribed by ACML from time to time.

Can I transfer stocks towards Initial margin?

Yes. You may transfer Initial Margin in the form of Cash/ Group I Securities approved by ACML to the credit of our MTF Securities Collateral Account. Post the transfer, client may start trading under NSE MTF . During end of day process, Collateral will be shifted by ACML to the respective Exchange where the trade is executed.

What is a Group I security?

Stock Exchanges periodically publish the list of Equity shares under Group I/II/III as per SEBI Master circular no. SEBI/HO/MRD/DP/CIR/P /2016/135 dated December 16, 2016. The exchange wise list is published on www.acumengroup.in/ Approved securites

What are the types of Stocks dealt under MTF?

Only Equity shares that are classified as Group I Security shall be dealt under MTF. Stocks under MTF include Collateral Stocks to be deposited by you for availing MTF and Funded Stocks purchased by you under MTF.

Do I have separate UCC for Normal Trading and MTF?

No. Only one UCC bearing your client code will be used for placing orders at Stock Exchanges. You have to select “MTF“ product for placing order under MTF category. You will have only single ledger, but normal and MTF accounts will be segregated with different product code.

How can I transfer shares from my POA a/c to MTF collateral a/c ?

You can transfer shares from your POA a/c to MTF collateral a/c by delivery instruction slip, written request or request from your registered email address.

Important : Please note only eligible stocks will be available for transfer from POA to Collateral

Will I get dividend and other Corporate action on my shares in Collateral a/c ?

Dividend amount, if any, will be credited to your MTF Trading A/c (i.e. M A/c) on receipt of the same from the company in our Bank A/c. Other corporate action benefits (like bonus, split) will also be added/split to your holdings on receipt of the same from the company in our collateral a/c.

Can I do Margin Trading at Derivative segment?

No. MTF is a facility extended by Corporate Stock Broker only for the Equity Segment.

Do I get a separate contract note for Normal trades & Margin Trades?

No. But the trades under MTF need to be distinctly identified. So, for all other purposes, the trades are executed at the Exchanges in a single UCC and all levies including STT shall be levied as per single UCC.

Can I do a short selling under MTF?

No. Short selling in not allowed

Can I execute intra-day trades under MTF other than short sale?

Yes, subject to the availability of margins.

Can I freely sell stock acquired at MTF at any desired Exchange?

No. Sale of Funded/ Collateral Stocks at MTF of an Exchange shall be restricted to that Exchange. Such Stocks shall not be allowed to be sold at other exchange.

How do I place order under MTF?

You will be able to place orders at the Normal Segment and MTF based on the consolidated margins. Orders can be placed on-line or off-line. Orders under NSE MTF need to be marked by you as MTF Product. If there are sufficient collaterals under your respective MTF Collateral account, the marking shall be accepted by us.

What is the Brokerage applicable for MTF?

Brokerage slab shall be the same as applicable to Normal Trading Account.

Do I need to maintain the required margin at all times for the MTF?

Yes.

What are the types of margin calls sent to me?

You may get a Maintenance Margin Call at the end of any trading day for the deficit in maintenance margin. This happens when margin value of collateral stock is not adequate to meet the margin required for funded stock. You may get Mark to Market Margin Call where the Loan to Value exceeds 85% at an Exchange. Loan shall mean the ledger debit plus accrued interest under the Margin Trading facility. Value shall mean the Gross Value of funded stocks and Collateral Stocks deposited by client with ACML valued at last close price. You need to bring additional Margins to keep Loan to Value within 80% level.

What will happen if I fail to maintain required margin at all times?

In case margin fall below the minimum required margin, you will not be allowed to buy any securities under MTF and ACML shall make a Margin Call and the position can be liquidated at any time when sufficient margins are not in place. SMS shall be sent to client on such liquidation.

What happens to my existing Purchase? How do I convert it to MTF?

In order to transfer position to MTF intraday, you need to change product from normal to MTF. Prior to this, you need to transfer enough collateral in MTF.

How do I move collateral from beneficiary to MTF Collateral?

You need to send a special request to us mentioning the Exchange in which the beneficiary is to be parked as Collateral. The shifting is allowed with the specific understanding that dues in the normal account will be liquidated by you through sale of stocks and equivalent purchases will be made in the MTF account.

Can I withdraw part of the funded stocks where the stock value has appreciated beyond the MTF dues?

No. Funded Stocks can be released only on clearance of MTF dues and accrued interest.

Can I withdraw part of the funded stocks by making part payments towards the MTF dues?

Stocks withdrawal against part payment shall be subject to such conditions as may be stipulated by ACML from time to time.

How can I transfer available credit in normal a/c to MTF Cash Margin a/c?

You may request contact our team to transfer any clear credit in Normal ledger to MTF Cash margin A/c by way of JV which will be processed at periodic intervals.

How long can I keep debit balance under MTF account?

You can keep the debit under MTF as long as it is supported by sufficient collateral subject to the terms and conditions.

Can I withdraw funds from my MTF a/c ?

In case you wish to withdraw available credit from your MTF a/c, you need to inform us or send email at mtf@acumengroup.in. Available funds in your MTF a/c, after considering margin requirements, will be transferred to your normal a/c, You may then put in payment request for the required amount. Requested amount will be transferred to your registered bank a/c.

Can I sell shares which are placed as MTF collateral?

Yes, you can sell MTF collateral under ‘normal ‘ product. You have to give request for transfer from your POA account to MTF collateral account for initial margin fulfillment from Group 1 securities. Or else, ACML will be passed JV for transfer of required margin value from normal account to MTF ledger.

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