Knowledge Base

Samco Securities’ Margin Trading Facility (MTF) empowers traders and investors to amplify their purchasing power by offering up to 4x leverage on delivery trades across more than 800 MTF-approved stocks (subject to market conditions and risk committee approval). This facility enables clients to capitalise on market opportunities with a fraction of the required capital, adhering to SEBI and exchange regulations.

Key Features of MTF at Samco Securities

• High Leverage: Investors can access up to 4X leverage on over 800 eligible stocks, subject to market conditions and adjustments as needed, allowing them to maximize their market exposure. 
• Extended Holding Period: Samco’s MTF provides the flexibility to hold leveraged positions for an extended duration. Client positions will be auto-renewed in every 90 days, subject to the fulfillment of margin requirements. Clients can continue holding positions beyond 90 days; however, in case of a margin shortfall or as per Samco’s risk management policies, positions may be squared off to mitigate risk.
• No Activation Charges: The MTF facility is free to activate for all clients (charges were applicable only for old users).
• Extensive Stock Selection: The facility covers a broad spectrum of stocks across various sectors, enabling diversified investment opportunities. 
• Competitive Interest Rates: An interest rate of 0.05% per day is charged on the borrowed amount, calculated daily to ensure cost-effectiveness. This rate may vary based on market conditions with prior notice.

How MTF Works?

When an investor utilises MTF, their existing cash balance is used as collateral to borrow additional funds from Samco Securities. For instance, with a cash balance of ₹10,000, an investor can leverage up to ₹30,000, enabling the purchase of stocks worth ₹40,000 in total. The borrowed amount incurs a daily interest charge of 0.05% until repaid.

If an investor uses MTF to purchase stocks worth ₹40,000 with a cash margin of ₹10,000, the borrowed amount is ₹30,000. The daily interest would be ₹15 (i.e., 0.05% of ₹30,000).

Benefits of MTF

1. Increased Purchasing Power: MTF allows investors to purchase more securities than their cash balance would typically permit, enhancing potential returns.
2. Potential for Greater Returns: By leveraging positions, investors can amplify returns if the value of the purchased securities rises.
3. Flexibility: Investors can hold positions for an extended duration as long as they fulfill margin and MTM requirements and continue paying the applicable interest.

Risk & Compliance

1. Regulatory Compliance – MTF is fully governed by SEBI regulations, ensuring a secure and transparent trading experience.
2. Margin Calls & Liquidation – If margin requirements are not met, positions may be automatically squared off to prevent risks.
3. Market Volatility Risk – Leveraged positions are subject to higher volatility and potential losses.
4. Stock-Specific Risks – MTF applies only to SEBI-approved stocks, and availability may change based on compliance guidelines.
5. Responsibility of Traders – Clients should actively monitor their open MTF positions & MTM to avoid forced liquidation.

Risks Associated with MTF

1. Magnified Losses: While leverage can increase profits, it can also amplify losses if the market moves unfavourably. 
2. Margin Calls: If the value of the collateral falls below a certain threshold, investors may be required to provide additional funds or securities to maintain their positions.
3. Asset Liquidation: Failure to meet margin calls can result in the broker liquidating the investor’s assets to cover the borrowed amount.

How to Place an Order under MTF

Samco offers multiple platforms to place Margin Trading Facility (MTF) orders. The process differs slightly across the Samco App, Samco Web, and Nest Trader. Clients must ensure that the selected stock is part of the MTF-approved list before placing the order.

Placing an Order on the Samco App & Web

1. Log in to the Samco App with your credentials.
2. Search for the desired stock from the watchlist or search bar.
3. Select Buy and choose MTF as the product type.
4. Enter order details such as Quantity & Price.
5. Review margin requirements displayed on the order screen.
6. Confirm and place the order.
7. Upon execution, the purchased stocks will be auto-pledged under MTF.

Placing an Order on Nest Trader

1. Open the Nest Trader terminal and log in using your Samco credentials.
2. Add the desired stock to your market watch.
3. Click on F1 or Right-click on the stock and select Buy Order Entry.
4. Choose NRML as the product type from the drop-down menu.
5. Input required details such as Quantity, Price, and Disclosed Quantity (if any).
6. Confirm and place the order.
7. Upon execution, the purchased stocks will be auto-pledged under MTF.

Why is Pledging Important?

MTF (Margin Trading Facility) pledging is a regulatory requirement to ensure compliance and smooth operation of margin trading. By pledging your stocks, you

1. Secure Your MTF Positions – Pledging acts as collateral, helping maintain your leveraged positions.
2. Meet SEBI Guidelines – SEBI mandates pledging for margin trading to ensure transparency.
3. Avoid Position Liquidation – Unpledged stocks may lead to margin shortfalls, triggering forced square-offs.

How Can I Pledge My Positions?

1. MTF positions will be auto-pledged, eliminating the need for manual pledging. However, applicable pledge and unpledge charges will be levied.

Can I Sell Stocks Without Unpledging?

Yes, pledged stocks can be sold directly without manually unpledging them.

Conclusion

Samco Securities’ Margin Trading Facility offers investors the opportunity to significantly enhance their market exposure and potential returns through up to 4X leverage on delivery trades. While MTF provides substantial benefits, it is crucial for investors to understand the associated risks and manage their leveraged positions prudently. For more detailed information and to activate MTF, please visit Samco’s official website.

Disclaimer: Margin Trading involves risks. Clients should assess their risk appetite before opting for leveraged trading. Samco Securities is not liable for any losses arising due to margin calls or market fluctuations.