Understanding of MTF Available Margin Calculation
MTF Margin Example
| Day | Action | Cash Margin | Pledged Stock Margin (after haircut) | Un Realised P&L | Realised P&L | Margin on Stocks Bought | Net Available Margin |
|---|---|---|---|---|---|---|---|
| 1 | MTF cash + collateral setup | ₹10,000 | ₹90,000 | – | – | ₹0 | ₹1,00,000 |
| 2 | Bought stocks worth ₹2,00,000. Price falls ₹2,000 intraday | ₹10,000 | ₹90,000 | –₹2,000 | – | –₹90,000 | ₹8,000 |
| 3 | Sold stocks with ₹5,000 profit | ₹10,000 | ₹90,000 | 0 | ₹5,000 | 0 | ₹1,00,000 |
Key Points to Understand
Collateral Value Assumed Constant : The pledged stock margin stays at ₹90,000 throughout.
Losses Reduce Margin Immediately
Day-2: The stock price drops ₹2,000.
Unrealised loss (–₹2,000) is deducted from Net Margin, leaving only ₹8,000 available.
Profits Don’t Instantly Increase Margin
Day-3: Stock is sold for a ₹5,000 profit.
Even after booking profit, the Net Available Margin simply resets to the original ₹1,00,000.
Interest Charges : MTF interest (debited weekly) is also deducted from Net Margin as it accrues.
Profit Credit Timing
Unrealised gains are never added to available margin.
Realised profits from MTF trades are added to your cash margin only at month-end when the entire MTF cycle shows net profit.
Summary:
Losses reduce your margin right away.
Profits don’t boost your margin until the month is closed and the MTF position is fully settled.
Always maintain extra funds or collateral to avoid margin shortfalls and interest charges.
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