Things to Know Before Choosing MTF
What Can be Used as Collateral for Margin Funding?
Cash as well as non cash holdings can be used as collateral while placing trades via MTF. Available Funds for MTF would be your combined ledger plus pledged holdings.
Under What Circumstances will My MTF Holdings be Liquidated by RMS?
- When required margins are not being maintained.
- Holding Coverage has fallen below 20%.
Example below (referring to Question no. 1):
A client had Rs. 25,000, he bought a stock of worth Rs. 1,00,000 with 4X leverage provided by Dhan.Now, if the value of stock falls to Rs. 93,000 client will be squared off as per below formula:
Combined Ledger : -75,000
Holding Full Value: 93,000
Holding Coverage = (-75,000 + 93,000) / 93,000 = 19%