MTF margin calculator

The rules around MTF

Only Group I securities are eligible for margin trading in the cash segment, and equity exchange-traded funds were added to that list in 2018. The initial margin on a funded buy is a value-at-risk charge plus a multiple of extreme loss margin, which varies from scrip to scrip, and is not a single universal percentage across stocks.

Group I scrips that are also in the futures and options segment carry an initial margin of VaR plus three times ELM. Group I scrips not in F&O carry VaR plus five times ELM. Maintenance margin is also VaR plus five times ELM for non-F&O Group I, with many brokers holding a floor near 35 per cent of the position. Initial margin must come in as cash or cash equivalents; stocks cannot be pledged for the initial. Funded shares sit in a Margin Trading Facility beneficiary account and are pledged in favour of the broker until the buy is closed. This calculator takes your own-margin share as a direct input because the exact VaR and ELM figures change by scrip and by day.

What each number on the page means

Buy value is the price times the quantity. Own margin is the per cent you enter times the buy value. The funded amount is the rest: it is what the broker lends against the pledge. The interest cost is funded amount times the annual rate times the days held divided by 365, on a simple day-count basis. Net profit or loss is the gross from price times quantity, minus the interest.

The return on own margin is net profit or loss divided by the own margin, not by the buy value. The same trade without funding uses the buy value as the denominator, so the percentage is smaller in absolute terms. The gap between those two numbers is the whole point of using an MTF. The exit breakeven is the price at which net profit touches zero: buy value plus interest, divided by quantity. On a 30-day hold at a 12 per cent rate on a 75 per cent funded share, the breakeven on a ₹1,000 buy is about ₹1,007.40 a share.

A worked example

Buy 100 shares at ₹1,000 with 25 per cent own margin, which is ₹25,000 of your own money against a ₹1,00,000 buy value. The broker funds ₹75,000. Hold for 30 days at 12 per cent a year: interest is 75,000 times 0.12 times 30 divided by 365, or ₹739.73. Sell at ₹1,050. Gross gain is 50 rupees a share on 100 shares, which is ₹5,000. Net after interest is ₹4,260.27.

The return on your ₹25,000 own margin is 4,260.27 divided by 25,000, or 17.04 per cent in 30 days. On the same trade paid in full with ₹1,00,000, the return would be 5 per cent in 30 days. Funding has tripled the percentage, but the whole arithmetic reverses if the stock falls: a ₹50 loss per share on 100 shares is ₹5,000 before interest, ₹5,739.73 after. That is a 22.96 per cent loss on the own margin, not the 5 per cent an unfunded buyer would have seen.

Margin calls and the risk of a forced sale

Because the broker is carrying the funded part, the broker has a right to call for more cash if the pledged shares fall. The fall that triggers a margin call depends on the maintenance margin set for that scrip and the broker's internal floor. If the cash does not arrive in the stipulated hours, the broker can sell the pledged shares at market to cover the loan. That sale happens at a price the borrower has no control over and can be substantially below the buy.

An MTF is not a time-neutral position. Interest runs every day the funding is open; a stock that moves sideways for a quarter at a sample 12 per cent interest cost loses about 3 per cent of the funded amount before any price move. On a position that was 75 per cent funded, the interest alone is about 2.25 per cent of the buy value over the quarter. Put plainly: an MTF is a borrowed buy, not a long-term holding.

Return on own margin against an unleveraged buy

This page shows two lines on the chart: return on own margin as the exit price moves, and return on the same trade without funding. On the upside, the margined line is steeper, because every rupee of gain is divided by a smaller own margin. On the downside, the margined line falls further and faster because the interest cost is added to the loss.

Where own margin is 100 per cent, no funding is used and the two lines sit on top of each other. Where own margin is 20 per cent, the leverage ratio is five to one and every move multiplies by five against your own money, before interest. The chart carries no view on what the price will do. It is arithmetic on the price you enter against the price you want to test.

What this calculator leaves out

• Brokerage and taxes on the buy and the sell. Run the brokerage calculator alongside this one to add STT, exchange charges, stamp duty, GST and the DP charge.
• Capital gains tax on the net. Short-term gains on listed equity are at 20 per cent and long-term gains above ₹1,25,000 are at 12.5 per cent for the FY 2026-27.
• Dividend received during the hold, which is paid to the pledgor subject to the DP rules.
• The cost of pledging and unpledging, which many depository participants charge per scrip.
• Impact cost on a forced sale. The calculator uses your exit price; a market sell at a thin quote can land far below.

Frequently asked questions

Courses that teach the subject behind the margin calculator (MTF)