The rise of margin trading facility in India: A regulated product for smarter investing
margin trading facility (MTF) has gained significant attention among Indian investors. This product allows investors to enhance their buying power by leveraging their capital, making it an attractive tool for those looking to optimize their market exposure.
The growing interest in MTF is reflected in its book size, which expanded from around Rs.50,000 crore in March 2024 to a peak of around Rs. 85,000 crore in September 2024. However, it has since moderated to around Rs.75,000 crore in February 25, marking a around 12% decline from its peak, which is in line with the fall in the headline index during this period.
Evolution of MTF: From Large Brokers to a Wider Market
Historically, MTF was primarily offered by bank-based brokers and brokers with high net worth, making it accessible to only a select group of investors. However, recently, many brokers, including discount brokers, have started offering this facility, significantly expanding its accessibility.
Further many bank-based brokers have started offering this product at a very attractive interest rate with some even offering at 9.5% to 9.75%, making it a very compelling product for advanced investors. This shift will encourage greater retail investor participation and contribute to the overall market liquidity.
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