Can you please consider providing an option to the user to select the multiple/amount of MTF between min and max possible range?
Example for a stock if max MTF is 4X, the user can move a slider to choose how much leverage they want to avail depending upon their confidence in the position. The slider can range from 1X to 4X thus giving the flexibility to the user to select either 2X or 3X or 1.5X etc. Not all trading positions are of equal merit but in current scenario, all positions have to be taken on max MTF leverage. This leads to unnecessary losses on low confidence positions.
Leverage slider is a standard feature on crypto brokers where leverages go up to 100X and thus it makes sense to let the user decide how much leverage to avail between 1X to 100X.
I believe same feature can be provided by you also.
long time back i request for a feature in MTF . a mtf calculator where i can manually add the stock price and duration and desired price or target price and it will give me all the details about total interest i have to pay . please kind add this feature . this feature is needed
Did you even read the post properly? Am I requesting for 100x leverage or am I requesting for a way to choose my leverage between min to max being provided?
Hi there. One doubt. Here when they are talking about cash does it mean cash/ Cash equivalent.
Basically my doubt is if i buy 1000 shares of X at 100 Rs on MTF with 4x leverage which is equivalent to 100000 Rs of value. Do i need to have 25000 in cash or if i have 25000 in Liquidbees or Sbi Liquid ETF after haircut which are considered as cash components will they be allowed to fund the MTF stock X without the interest being charged on 25000?
will it suffice or do i need to have 25000 in cash for the interest not be charged on 25000Rs?
Thanks
Unfortunately it will not be feasible for us to get a leverage slider at the current point in time but as a temporary solution we suggest you could buy lesser quantity of shares in MTF and buy the remaining in delivery to to able to get a similar sort of advantage.
Incase of MTF, interest is charged on the total debit in ledger. So in this case, although you are bringing in cash component, we will need to give the exchange Rs 1,00,000 in total. So overall debit in your ledger will become Rs 1,00,000 on which interest will be charged. In case you bring cash of Rs 25000, interest will be charged on balance Rs 75,000.
âMTF shares will be pledged in favour of Dhan. To verify, authorise pledge on trade day itself by 9pm, else shares will automatically be sold on T+5 daysâ
Settlement happens on T+1 day. That means, stocks get deducted from sellerâs demat account on T+1 day and gets credited to buyerâs demat account on T+1 day. Now, if a buyer doesnât have stocks on then T-day, how can he/she pledge something which is not even there? What exactly is happening here?
Why canât I authorise just after the trade during market hours? Itâs easy for a user to immediately authorise, otherwise there is a tendency to forget. Why after 4 PM only? Is there a logic for after market hours? Similarly why before 9 PM? Whatâs the reason behind such stringent timelines?
else shares will automatically be sold on T+5 days - why T+5 days, why not earlier or after? Whatâs the reason here?
You seem to be comparing the process of Pledge for Margin with one for MTF. MTF pledge is different than your usual process of pledging stocks to get margin when you are pledging existing stocks, in this case you are pledging stocks that you have bought in MTF and the stock broker (Dhan in this case) will be pooling in its own funds to the exchange; and hence the stocks are pledged before delivery.
MTF process is usually done post markets, that is when the CDSL window for pledge opens up. Pledge window for MTF opens post market and closes late, so we have timelines to follow here based on depository processes. Just to ensure you do not forget, we send reminders and show it upfront on the app.
If you donât pledge the stocks, ones purchased on MTF cannot be held more than T+5. Yes, we can sell this earlier too, but unless you have a margin call or margin shortfall - without that reason there is no need for us to sell before T+5. There are many swing traders who hold positions for short-term, so it works for them.
Hi @PravinJ - thanks for a quick response, but still have questions:
I want to specifically know how MTF pledge thing & whole settlement works. When I place a buy order through MTF - on the other side, there is a seller - when does debiting of stocks happen from sellerâs account - does it happen on the Tday itself? If not, then how come CDSL ask for pledging? What happens after pledging - do the stocks get credited to brokerâs pool account (because buyer has pledged in favour of Dhan) - what exactly happens here?
âMTF process is usually done post markets, that is when the CDSL window for pledge opens upâ
then how come, some other brokers (like mstock) are allowing pledging within the ordering process itself? How come they are able to - they call it pre-pledge feature
My question was - is there some SEBI rule here, some settlement finalization on T+5. T+5 (and not 6 or 7 or 8) must have come from some rule, right?
When Stocks are purchased, the seller on other side does not know if the buyer on other side is going to get them for delivery or intraday or say MTF. He just sells them, and they are settled like any other scrip, nothing specific for MTF. So the shares will be delivered on T+1 as now, T day soon expected. Exchanges have been provided margin information during trading, and funds /shares are settled after the settlement processes runs with Exchange, Depository and Clearing Corporations. Also stocks purchased in MTF are delivered to your DP, but pledged with Broker.
Yes, some platforms may do pre-pledge⌠but essentially we are not comfortable with that process. Itâs basically that securities are pre-pledged without knowing what users will buy (a risk for us as a platform) or as a user you give blanket authorisation for all trades to be done (a risk for you as a user). We follow simple rule that user should know whatâs pledge for, and when its post market - the authorisation is limited to specific stocks and not all stocks. There isnât any thing right or wrong about the pre-pledged way, just that we didnât very feel comfortable about blanket approvals.
There is an exchange rule on T+5 trade with margin, positions on behalf of clients canât be held beyond this. So they have to be either sold off by the client or by us, beyond that there is exchange penalty on the stock broker.
But it needs to be unpledged first, right?
In CNC, it was not pledged at the first place, so simple Sell.
But, what about MTF - there needs to be unpledging, plus unpledging charges also needs to be paid - how is all that handled in background?
Hi @curious_trader Dhan had introduced in-line unpledge when you sell stocks that are pledged individually or even ones on MTF. Yes, you do have a choice to unpledge your stocks individually too - but we see no reason why that should be done.
Just to understand a bit further the âin-line unpledgeâ - does it mean - as a user, when I press Sell CTA, I donât have to do anything to unpledge, it will automatically be unpledged & sold?
Would I be shown some message or progress on unpledging?
Is unpledging quite fast, that I wouldnât notice much - it will be as good as normal holdings selling?
Do, I as a user, neednât provide any consent or OTP (like I do at the time of pledging) for unpledging?
Similarly, I neednât be redirected to CDSL website for unpledging?
How does the whole thing works, step by step
There will be no message, it will just be done as part of process at the backend when you sell.
Yes, it will be as good as selling normal holdings, it will be super fast and you wouldnât even notice it.
No OTP required.
You will just need to press the âSellâ button like you do for a CNC holding and it will be sold. There is no other process required to be done by you for this.
We allow upto 4X leverages in MTF on 1000+ stocks. However, we have currently paused fresh investments in MTF temporarily as a risk management call due to expected high levels of market volatility. We have written more about it here.
We will be back with it shortly and hope you try it out once we start taking fresh investments.