Document

All about Funding

Modified on: Tue, 12 Jul, 2022 at 12:02 PM

TABLE OF CONTENTS


How to activate Margin Trade Funding?


To activate the MTF product  following three conditions are applicable.


1) You need to have a NSDL Demat Account with Tradeplus  


2) POA should have been given to your Demat Account


3) You should have access  to our Rocket Plus trading software as the MTF product is pre-configured with the required SEBI guidelines into our state of art trading software - Rocket Plus


Here are steps to involved Activate MTF:


  • Email your request to support@tradeplusonline.com active Margin Trade Funding from your Registered Email ID

  • If you don't hold a POA enabled NSDL Demat Account with Tradeplus, you will receive a call from our Sales Team  to open one with . 

  • If you already hold a POA NSDL Demat Account with Tradedplus, you will get call from our Support Desk to confirm activation of Rocket Plus (if you are not already subscribed to it) 

  • If your account satisfies the 3 conditions explained above, MTF product will be enabled within 24 working hours.



Which stocks are funded and what is the applicable margin?


Required margin and leverages may vary from stock to stock. See the details given below. 


Category of Stock
Initial margin and maintenance margin as set in Trading system
Group I stocks available for F&O Trading VaR + 4.5 times of ELM or 50% , whichever is higher 
Group I stocks not available for F&O Trading VaR + 6.5 times of ELM or 50% , whichever is higher 


Find attached the list of stocks funded and the margins applicable for taking positions in these stocks under MTF



Which stocks are accepted as collateral?


The list of Approved stocks accepted as Collateral is for the MTF trading is attached below. For all collaterals, the haircut rate will be as prescribed by the Exchange from time to time. For example, if the haircut fixed by stock A by NSE is 20%, then  on a stock worth 1 lakh, a 20% haircut will be applied and remaining 80000 will be added as collateral limit. This is however, subject to change from time to time.


 

How to pledge stocks as Collateral?


As per the revised SEBI guidelines, you need to pledge the stocks that you would like to give as collateral for MTF


  • Identify the stocks from your holdings list which you would like to place under pledge
  • Login to Rocket Plus and place a request to pledge stocks as collateral. Watch Video here to know how to pledge stocks. Alternatively, Email the listto support@tradeplusonline.com with a request to place them under pledge
  • Based on your email or online request, we will initiate the pledging process. Requests received before 5pm on a given day will be accepted at the EOD
  • Once the Pledge Initiation process is completed at our end, you will receive a SMS from NSDL as seen below, to your registered mobile number

SMS 1 Understanding the new margin pledge system

  • The same details will be sent to your registered Email id as well
  • Click on the link which you receive in the SMS / Email
  • This will take you to the NSDL Page where you will be prompted to key in your PAN number as shown below

Pan 1 234x300 Understanding the new margin pledge system

  • Key in your PAN number. On valid entry, a new page will open with the list of stocks and quantity on which you had requested to mark pledge as shown below

Select Pledge NSDL 1 191x300 Understanding the new margin pledge system

  • Select the check boxes and Confirm
  • You will then receive an OTP via SMS to your registered Mobile number as given below

SMS OTP 1 Understanding the new margin pledge system

  • Enter the OTP on the NSDL page to approve the pledge.
  • Once the pledge is approved, margins will be provided against the pledged stock from T+1.
  • The fee for pledging will continue to remain the same. This is because there is a cost levied by the depository to create the pledge and re-pledge.
  • The stocks thus pledged as Collateral will not reflect in the trading terminal. In case, you prefer to sell any such collateral stocks, you need to send us an email to support@tradeplusonline.com before 1pm. The stocks will be released and made visible in your normal holdings the next day to enable you sell them online.

Important Points to note while pledging stocks


  1. All online pledge requests are to be made before 5 pm
  2. As a process, a SMS and email will be sent from NSDL with a link to accept pledge. In case, you do not receive it, you may use this common link to accept pledge - https://eservices.nsdl.com/mrg/#/accountDetails
  3. All pledge requests are to be confirmed before 8 pm on the same day. Margin benefits will not be available if the pledge requests are accepted after 8pm
  4. MTF Collateral Pledge requests of clients who are enabled for MTF segment will only be accepted.
  5. Requests made beyond 5 pm are not valid and will be removed at the end of the day
  6. Requests made on Saturdays and Sundays will be not be accepted
  7. For MTF trading, value of pledged stocks after haircut will be provided as collateral benefit. Here the cash collateral ratio doesn't come into picture.


How to transfer Cash Collateral to MTF


You may do this from Rocket Plus Trading Platform.


Select the man symbol and choose funds option in Rocket Plus Mobile and Pay in option from Rocket Plus web trading platform. To do from the Exe version, select Funds - Pay-in



Step 2 - Select Add funds from the bottom of the Mobile screen


Step 3 - Enter the amount you want to transfer, choose All/All/MFT from Select Segment Drop down, Choose payment mode and follow screen instructions.



Alternatively, if you wish to transfer funds from your NSE CM segment to MTF segment, you may write an email to support@tradeplusonline.com



How to place a MTF trade?


Our system is very simple. When you place an order through Rocket Plus it will open up the Order form. Select the product as MTF  trading platform, when you place an order you can select product type as MTF and place the order. The order form will look as given in image below


Rocket Plus Web

 

  Rocket Plus Mobile 


To place from MTF Exe, select MTF from the Prod Type field.



Is there anything that I need to do after placing order under MTF?


Yes, there is an additional process that needs to be done and it is important to complete a MTF transaction. You will be required to mark pledge on the stocks that you had bought. This is as per the revised SEBI policy on MTF. According to the revised policy, not only the collateral stocks, even stocks bought under MTF has to be pledged to be considered as MTF position. Else, it will be allocated to your Normal CM segment. 


Once you buy stocks under MTF, they will be uploaded in Backoffice and a forward Pledge request link will be created. This link will be emailed & also sent as a SMS to your registered contact detail. You will have to click on the link and accept the Pledge request before the end of T+1 day.  In case, you do not receive the Email or SMS, use the below given link to accept pledge request


https://eservices.nsdl.com/mrg

What will happen if I do not accept pledge for MTF trades?


Your stocks will reflect under MTF funded position only if you accept the pledge. If pledge is not accepted, the purchases will be considered as stocks bought in Normal Cash segment without having sufficient funds. It will therefore, attract peak margin penalty as well. The shares, in such case, will be transferred to Client Unpaid Securities Account (CUSA) as per policy and will be squared off on T+2+4 or when credit coverage issue arises or when the M to M loss hits the stipulated level, whichever is earlier.


To discourage this, 1% on the pledge transaction value subject to a minimum of Rupees 50 per pledge request, will be debited as charges if the pledge link is not accepted within the prescribed time.


Will I get an intimation on my MTF transactions?

The order and trade confirmations can be seen online in the trading terminal. At the End of the Day, a MTF statement will be emailed to your registered email id. This statement will have all the details required.


A sample statement is given below and these are the details that will be availabl


1. Opening Funding Balance

2. Addition / Reduction for the day

3. Net Funding

4. MTF Trade details for the day. This will also include Liquidation transactions, if any.

5. Margin statement with Stock Collateral Value

6. Cash Collateral Value

7. Total Collateral Value

8. Margin Required at the Beginning of the Day

9. Margin Addition/ Reduction for the Day

10. Net Margin Required at the End of the Day

11. Other Losses or Charges. This includes booked losses

12. MTM Loss on Funded Stocks

13. Net Value. This is the final Excess of Shortage of Margin on which further funding will be available

14. Details of Stocks provided as Collateral with Value before and after haircut

15. Details of Funded stocks with Value, MTM loss etc.,






How to calculate available margin using MTF statement?


This can be better explained with an illustration. For example lets say you have the following:


     a. MTF cash collateral - Rs. 826262

     b. MTF stock collateral (after haircut valuation based on previous day's closing price) - 4813142

     c. Margin Required on funds utilized (basically the funded stock position) - 3209244

     d. Other loss (which is booked loss and charges) of 196273

     e. Mark to Mark loss - 2171604

     f. Accrued Interest - 17378


In the above scenario, the formula for calculating the margin available is 


Cash Collateral +Stock Collateral - Margin Required - Other Loss - Mark to Mark loss - Accrued Interest


826262+4813142-3209245-196273-2171604-17378=44904 Credit which is the margin that is available to take further MTF positions.


As we fund a maximum of 50%, you may buy further for a maximum value of Rupees 89808 under MTF.


The Margin section of the MTF statement emailed will look as below


 



How is the MTF margin computed in the trading system?

The trading system will carry slightly lower margin as against what's seen in the MTF statement. This is because, in the MTF statement, the minimum margin required will be 45% while it is 50% in the trading terminal. 


Let's understand with an example. Navigate to Funds and view the detailed menu under ALL|ALL|MTF. The web page view will be as below





To view this in the Exe, select RMS - View Limits




Here the Cash Margin available is = Cash Collateral + Stock Collateral (After haircut) - Other Loss.


It is basically the total margin that you have deposited after adjusting for the loss booked and the charges which is nothing but the Other Loss


Use Margin = Margin required on the funded stocks + M to M loss.


The difference is the net margin that is available or the shortage.


What is the meaning of margin calls & When will I get an intimation of it?

Margin calls are the alerts made by the Company when the available margin is less than the required margin as per SEBI norms as explained above.


The margin will be provided in the MTF statement as seen in the below pasted image, and this statement will be emailed on a daily basis as long as you have positions under MTF. If the shortage/ excess in margin shows a debit balance, it means it is a margin call and the shortfall cannot last for more than 5 working days. You will be required to either cut positions or bring funds/stock collateral to cover the shortfall. Failing this, RMS will reduce the positions to adhere to 


As per the SEBI requirement once a margin call is sent to the client, the client must bring in the required shortfall immediately. If the client does not bring in the required margins then Tradeplus can liquidate/sell the shares (funded shares and collateral) if the client fails to meet the margin call requirements.



If there is a margin call in the MTF segment and if I have a credit balance in other segments, will my credit balance be adjusted against the margin calls in MTF?


Yes. If there is a margin call in the MTF segment and if you have a credit balance in other segments, then such credit balance would be transferred to the MTF segment to prevent further margin calls.



If I have a debit in my MTF ledger and no funded stock positions, then how long am I allowed to keep such debits?


If you have no funded stock positions in your MTF account but have a debit in MTF ledger, then such debits may be due to unpaid charges and/or booked loss on your MTF trades. All such unpaid charges or booked loss must be cleared within 1 working day from the date of closing your final MTF position. If not cleared within 1 working day then Tradeplus reserves the absolute right to a) adjust the debit from cash collateral, if any, by transferring funds from collateral account to MTF ledger and or b) transferring funds from NSE CM segment, if any, to MTF ledger and or c) liquidate your MTF collateral stock to adjust the unpaid charges and/or MTF trade losses. 



What happens if the booked loss/ charges, MTM loss ad accrued interest rates are not settled?


Note that MTM / Booked loss and charges  in MTF ledger are necessarily to be settled through Cash payment. IT cannot be adjusted against the collateral  value.


Scenario I : There is a debit in MTF with NIL funded stocks


In this situation, as mentioned above, if the debit is not cleared on the very next of closing the final MTF positions, Tradeplus  then reserves right to do the following actions on the following day

a) adjust the debit from cash collateral, if any, by transferring funds from collateral account to MTF ledger and or 

b) transferring funds from NSE CM segment, if any, to MTF ledger and or 

c) liquidate your MTF collateral stock to adjust the unpaid charges and/or MTF trade losses. 


 Scenario 2: Where the client has funded stocks and  is continuing to use MTF facilitity


If the debit is not cleared on the next working day the system will as a process before the 10th of the month move the funds from your cash collateral account to the MTF ledger account to the tune of the unsettled amount. If there is no sufficient funds in the cash collateral account and if there is a credit in your normal trading account, it will be adjusted. If there is no credit in your normal trading account as well, then as last option the shares in your stock collateral account will be liquidated to the tune of the unsettled amount.



What is liquidation in MTF & When will it happen?

Liquidation is the process in which the excess stocks under Funded stocks will be moved from MTF to Normal segments. Let us understand some of the terms commonly used in MTF


a) Funded Stocks - The stocks bought under MTF are called Funded stocks

b) MTF debit - The total debit in MTF ledger is the MTF debit

c) MTF Collateral - This can be cash collateral or stock collateral. As the  name suggests, this is the amount that is brought in as a base with which funding is availed i.e, a stock collateral of 2 lakhs implies that with 2 lakhs positions can be taken for higher value in MTF


This is what will happen in liquidation


Scenario 1

The system constantly compares the MTF debit with the Funded stock value at CMP or Cost whichever is lower. The moment it finds the debit lower by Rupees 10000 against the funded stock value, it automatically does a process of moving stocks worth Rupees 10000 from Funded stock to your demat account as free stocks (this would have earlier been pledged stocks). Let us understand this with an example. Say you have a MTF debit of Rupees 25 lakhs and funded stock value for 25.5 lakhs. In this case, your ledger debit is 50000 lesser than the funded stocks that we hold against your debit. Hence, this amount need not be funded as there is no corresponding debit against this. The system therefore, does liquidation whereby stocks worth 50k will be released from MTF funded stock and released to your demat account as free stocks. This stock is now free from pledge and you may sell it under CNC segment itself the next time you would like to sell it.


Tradeplus will liquidate the client positions on FIFO basis and within FIFO the security with the highest value will be liquidated first. 


Scenario 2


If there is any payout short for MTF purchase position the trades will then be transferred to normal. Eg--> A bought 10000 nos of 'X' stock and a pledge is created for all 10k nos. Let us assume that there was a short delivery from the Clearing Corporation on the payout date and we received only 9900 stocks instead of 10000. In such case, the entire trade will be moved to NSE CM segment and the shares will be transferred to Demat account as free stocks or to CUSA depending on the availability of funds.


Scenario 3


When the required margin of a stock increases to 100%. 


Exchange releases VAR margin on every stock on a continuous basis. In this process, there is a possibility of stocks moving from a 30% or 40% or any other % to 100% margin requirement. If that happens to a funded stock, it will then be liquidated from MTF. To understand better, let us take an example.


Let us assume that client 'A' bought stock 'X' and paid a MTF margin of 53%. There will be no issue as long as the MTF margin requirement stays within 100%. The moment the VAR of 'X' moves to 100%, it will move out of funded stock list and 'A' will be require to make full payment of the purchase value. The liquidation scenario will then arise as seen in the table below



DayMTF % of Margin RequirementStatus
Day 153%Continuous to be funded
Day 250%Continuous to be funded
Day 360%Continuous to be funded
Day 4
100%
The stock needs to be liquidated out of MTF. 'A' has to make full payment of the purchase value of the stock


Scernario 4: Liquidation also happens as per margin call policy



How to identify if a liquidation is done?

An email with MTF statement will be sent to you on a daily basis. The first section of the statement mentions the debit amount. The second section explains the trades done for the day. You will find settlement type as 'MTFLIQU' whenever a liquidation is done.


Alternatively, you may observe liquidated stocks changing from 'Pledged' status to 'free status' in your demat account.



What can be done with liquidated stocks?

You may bring back the liquidated stocks as collateral to avail more funding. Earlier, the liquidated stocks were easily brought in as collateral without an email request. With the new regulations, this is not possible now. You can however, pledge them online from your trading terminal. To know how to pledge it online, check here.  We will subsequently initiate the pledging process and you will receive an email and SMS to your registered details from NSDL for you to authorize by validating it with an OTP. It involves one more step, nevertheless, all these are done to protect investors to  ensure that no stocks move out of their demat account without their knowledge.


What is the interest % and how is it calculated?

The interest is 2% per month, and this is calculated on a daily basis based on the end of day debit balance in the MTF segment



If I have credit in Normal segment and debit in MTF segment, will interest still be charged on the MTF segment?

For the purpose of interest calculation in the MTF segment only the MTF ledger balance would be considered. Any credit in the normal segment will not be considered or adjusted while calculating interest on the MTF segment. If you want to move the credit in Normal segment to MTF segment then you need to send email to support@tradeplusonline.com



Can I transfer funds from my normal trading account segment to the MTF segment?

Yes, you can transfer the funds from the normal trading account segment to the MTF segment, as per the terms & conditions of the product.



Can I sell my MTF Collateral shares from the trading terminal?

NO. You cannot sell the MTF collateral shares from the trading system. You can avail margin for the collateral shares but you cannot sell them online as you might have utilized the collateral margin for taking positions in the MTF segment. If you still  like to sell the MTF collateral shares, you may then please send an un-pledge request to support@tradeplusonline.com providing details of the shares you like to sell before 1pm of a trading day.  We will subsequently un-pledge the stocks provided you have sufficient margins to cover the MTF debit and you will be free to sell them online the trading day.


If I buy 100 shares of X Company under MTF and then sell the same under NRML product later on some other day, will then the delivery be taken from my MTF funded stocks?

NO. Delivery will not be taken from the MTF funded shares since you have sold the share in NRML product which is not an MTF product. Delivery will only be taken if you square off the MTF funded stocks which are uploaded as positions at cost price in the trading platform. If you have sold the share in NRML product and do not have the shares in your Demat account or normal collateral account then the same will be treated as short delivery and will go for auction.



Can I trade in a single stock in MTF?

Single scrip concentration is allowed for stocks in the NIFTY 50 index. However, for stocks other than in the NIFTY 50 index, single scrip concentration is not allowed fully in the MTF segment and you also cannot transfer single scrip towards the Collateral account for availing the Collateral margin. There is a maximum single scrip funding limit fixed and it cannot exceed Rupees. 50 Lakhs where the scrip is part of NIFTY Next 50 and cannot exceed Rupees. 25 lakhs where the scrip is neither part of Nifty 50 nor Nifty Next 50. Further  if the single scrip concentration breaches the thresh hold level of  Rupees. 50 lakhs and Rupees. 25 lakhs respectively, then Tradeplus shall square off the positions and if there are any loss due to this selling, it has to be borne by you.



Can I do intraday trading in MTF?

No, MTF or Margin Trading Funding is a funding system and Intraday should not be done in it. Intraday trades can however, be done in MIS, Cover and Bracket order provided sufficient margins are available in your Cash segment. In case, you want to cover a position created in MTF during the day, you may convert the MTF position first to MIS / NRML and then square it off subsequently.




What will happen if the stocks I bought under MTF is not delivered on the payout date?

When the shares bought under MTF are not delivered by the clearing corporate on T+2 date, in the payout settlement, those shares are either expected to be settled in Auction Normal settlement or a corresponding auction credit is expected to be received. On the payout date, if the stocks are not received, then the purpose position that was marked in MTF will be reversed from MTF and posted to Normal segment.


This can be seen in MTF statement for the day, which will carry a liquidation transaction to reverse the purchase position.



What will happen if the stock I bought under MTF moves to 100% VAR Margin?

Every stock has a VAR margin attached to it and it differs from stock to stock and from time to time. The Exchange releases the VAR Margin details frequently for RMS purpose. Wherever, the VAR is 100%, it implies that the entire value of purchase has to be paid to the exchange and not a portion of it can be funded. Thus, if you had bought a stock under MTF and suddenly one day, the VAR of that stock moved up to 100%, you will then  be required to make full payment of purchase value of that stock.  We will subsequently release it to your demat account as a free holding. This is also one type of liquidation. Alternatively, you may sell them to bring down your obligation. 


Can I close/suspend the MTF funding facility offered by the company or can the company terminate my MTF account?

Yes, in both cases. You may close or suspend the Margin trading account at any time after paying the dues and and by sending an email to support@tradeplusonline.com 


The Company can also terminate/ suspend your MTF segment, in the event of breach of any terms or conditions of the MTF funding.

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