Pay Later MTF

Created by Priya p, Modified on Wed, 22 Jul at 9:36 AM by Priya p

Pay Later (MTF) Interest: Margin Trading Facility also known as Pay Later (MTF), is a product where you get funding from m. Stock for buying stocks in the share market. It is only applicable for delivery trades. M. Stock offers up to 80% funding in more than 1100 + stocks with interest as low as 6.99% annually, which is one of the lowest interest rates in the industry. The Pay Later (MTF) facility is only available in the Equity segment (cash market) You cannot use the Pay Later (MTF) facility in the Futures & Options segment. For more details, please refer below link: https://www.mstock.com/margin-trading-facility Additionally, you may refer to the video for better understanding: https://youtu.be/USXmiMoajfA Please note that the MTF interest rates are charged as per the slab below: Funding Value Pay later (MTF) Interest Charged (Per Day) Upto ₹25 Lakhs 0.0411% Up to ₹5 crore 0.0274% Above ₹5 crore 0.0247% For example, say you want to buy stocks worth ₹20 lakhs. But you only have ₹4 lakhs in your trading account. To fund this transaction, you can borrow ₹16 lakhs from m. Stock under the Pay Later (MTF) facility. In exchange, you will be charged an interest rate of 0.0411% per day as the value falls into the funding slab of 'up to ₹25 lakhs' If your borrowing amount is more than ₹5 crores, then 0.0247% per day interest will be charged, which is one of the lowest Pay Later (MTF) interest rates in the industry. m. Stock charges interest on the total funding that you take from us on a cumulative basis. So, the higher the funding amount the lower will be the Pay Later (MTF) interest charged. You can also refer to the list of stocks, available for trading under Pay Later (MTF) facility by clicking here: https://www.mstock.com/margin-trading-facility/emargin-stock-lists

1. To place order under Pay Later (MTF) please follow the below process: • Go to your Watchlist • Search for Equity • Click on Buy/Sell • Select “MTF” as your product type  • Enter quantity and rate (in case of a limit order)  • Click on “Buy”

2. What is the Pay Later (MTF) pledge and closure charges? Pay Later (MTF) pledge creation and closure charge is Rs 32+GST per request.

3. How to convert my Pay later (MTF) position into Invest? Follow the below steps to convert your holdings purchased through Pay Later (MTF) to Invest. Select the respective position and click on ‘Convert’ Enter the quantity and click on ‘Convert’ In case of insufficient funds, you will get the option of ‘Add Fund’ Note: • Ensure ‘Margin Required’ is available to consider the request • Can place conversion request for partial quantity as well • Converted holdings will be visible in your Portfolio in T + 1 Day • Conversion request can be placed only during market hours • On conversion, product type changes from MTF to Invest and reflects in positions for that day only.

4. Do I need to pledge stocks before placing Pay later (MTF) buy order? You will be able to execute Pay Later (MTF) trades without pledging stocks, pre or post order execution. All pledging related process with the depository will be handled by m. Stock. No authentication via OTP will be required from your end.

5. How long will the Pay Later (MTF) interest be charged? Interest on Pay Later (MTF) will be levied depending upon the settlement cycle of the scrip, till the outstanding amount is cleared or your position is squared off. Furthermore, you may refer to the video for better understanding: https://youtu.be/qJBhsjQIAFc

6. When does interest start accruing if I enter a Pay Later (MTF) position today? Kindly note that interest on Pay Later (MTF) positions becomes applicable from the next working day (T+1) after the position is created. 7. How is interest calculated under Pay Later (MTF)? Let's say you want to buy stocks worth ₹1 Lakh. You already have ₹25,000 in your account. The balance ₹ 75,000 will be funded by m.Stock under the Pay Later (MTF) facility. So, you will pay interest @0.0411%, which comes to ₹11,242 for the year. Note: Pay Later (MTF) interest is charged on daily basis. In above scenario, interest charged per day would be ₹31.

8. Will I get an additional margin on my stocks, bought under the Pay Later (MTF) trading facility if the same appreciates in value? No, as per SEBI guidelines we are not allowed to provide you additional margin on MTM profit made on your funded position.

9. Will I get the benefit of realized profit against my Pay Later (MTF) position on the same day for further trading? No, the benefit of realized profit can be utilized for trading only from the next trading day.

10. Can I pledge my existing stock holdings to fulfil the margin requirement to avail Pay Later (MTF)? Yes. You can pledge your existing stock holdings to get funding through Pledge Shares and place a Pay Later (MTF) order with the acquired funds. However, you will have to maintain a clear ledger/settled cash balance to access the Pay Later (MTF) facility.

11. How can I check my Pay Later (MTF) positions Your Pay Later (MTF) positions are updated on a real-time basis and reflected under the 'Positions' tab in our app and web platform.

12. If I have ABC stock in holdings and purchase the same stock under the Pay Later (MTF) facility, will there be any impact on my existing holdings? The only impact you would see is on your “average buy price”. Your average price will be updated considering your holding + Pay Later (MTF) trade. This will help you to track the overall profit and loss.

13. Will I be able to buy and sell on the same day in Pay Later (MTF)? Yes, you will be able to do intraday trades under Pay Later (MTF). This means that you will be able to buy and sell the same position on the same trading day.

14. Is BTST (Buy today sell tomorrow) allowed under Pay Later (MTF)? Yes, BTST is allowed under Pay Later (MTF). So, stocks bought under Pay Later (MTF) can be sold on the next trading day. You do not have to wait for the transaction to be settled. Note: When executing a Buy transaction on T day, you are required to provide the minimum e margin as per the defined percentage set by m.Stock. • If you choose to sell the unsettled Pay Later (MTF) position on the following day, you will need to provide the applicable Exchange margin upfront (including VAR + ELM + Others), • In case your provided e-margin is below 40%, you have to maintain the applicable Exchange margin upfront (including VAR + ELM + Others) to sell your shares in BTST. • However, if your provided e-margin is above 40%, there is no requirement to provide applicable Exchange margin, the BTST order will be processed directly.

15. Do I get Dividend benefits on stocks purchased through Pay later MTF ? In the case of dividend, the benefit will be transferred to you. Note: Dividend credit is directly processed by the registrar to the respective client's bank account. 16. Will I be able to short-sell stocks using the Pay Later (MTF) facility? Short selling is not allowed under the Pay Later (MTF) facility.

17. What if I buy some shares under Pay Later (MTF) product and then sell them under INVEST product on the same day? When you place your sell order (under INVEST product), it will have no impact on your Pay Later (MTF) position. If you already hold 50 shares of ABC company Ltd. in your portfolio, then your sell order will get adjusted against your holdings. Otherwise, the order will be rejected.

18. What if I buy some shares under INVEST product and sell them under Pay Later (MTF) product on the same day? There is no connection between your Pay Later (MTF) position and your INVEST order. So, if you already hold some shared under Pay Later (MTF), then your sell order will get adjusted against your Pay Later (MTF) position. Otherwise, the order will be rejected. 19. Is there any cap or restriction on the Exposure Limit under the Pay Later (MTF) facility? Yes, as per our internal risk management policies, we can restrict the maximum gross exposure as well as individual stock-wise exposure of a client under the Pay Later (MTF) facility. For now, it is set at ₹15 crore per client.

20. Why is my Pay Later (MTF) position not reflecting? Multiple scenarios might lead to your Pay Later (MTF) position not reflecting on your position Tab. Funding Amount changes: The funding amount is based on the VAR margin defined by exchange. This keeps on changing. If the VAR margin % is increased, then the m. Stock funding value also changes. In some cases, the funding value from m.Stock can go down to 0. You will then have to sustain the entire position value, i.e., 100% funding would have to be from your end. In this scenario, Risk Management System (RMS) will convert your position to delivery and the position value will be recovered from your ledger. In case of insufficient funds, your ledger will go into debt. Therefore, if your Pay Later (MTF) position is not reflected, check your portfolio instead of the Position tab. Corporate Action/Scrip group changed to T2T: In case of corporate action, you will receive an email from m.Stock to inform you about the effect of the corporate action. Your position will be squared off if the suggested action is not taken within the timeframe explained in the email communication.

21. Why is my ‘Available funds to Trade’ balance showing as negative after trading under the Pay Later (MTF) option? Your ‘Available to Trade’ balance might be negative because your Pay Later (MTF) position has been converted to INVEST/Delivery trade. When this happens, you need to fulfil the delivery trade obligation by paying a 100% margin. Since your margin gets utilized against your Pay Later (MTF) fulfilment, (Pay Later (MTF) to Invest trade conversation) your ledger will reflect negatively. If there is an MTM loss on the trading day and the margin requirement is not fulfilled, then certain quantities may get converted to INVEST.

22. What is the difference between Pay Later (MTF) and Pledge Shares? In Pay Later(MTF), you get funding from m.Stock for buying stocks in the share market. You can use this capital to undertake delivery trades. However, in Pledge Shares, you pledge your existing (approved) stocks with the broker and in exchange, you receive funding (margin). With this funding, you can trade in Intraday, Futures & Options and pay later (MTF) Margin Pledge Interest: Pledge Shares lets you pledge your existing stocks (from the approved list) with your broker to get funds or margin for trading. A small deduction called a haircut applies (each stock has a set percentage as per the broker’s risk policy). For example: If you want to buy shares worth ₹1 lakh but don’t have enough cash, and you have stocks worth ₹1.25 lakh in your Demat account, you can pledge them. If the haircut is 20%, you’ll get ₹1 lakh as margin. While, interest of 9.99% p.a. is applicable on Margin pledge as an when you utilize the collateral limit. So, if you take funding worth ₹100, you will pay 9.99% interest in a year, which is 0.0274% in a day. To elaborate, here are 3 scenarios: Value of existing stock portfolio Haircut Funding received after haircut Margin Pledge Interest payable (9.99% p.a.) ₹10,000 10% ₹9,000 Rs.899 ₹1,00,000 15% ₹85,000 Rs. 8492 ₹10,00,000 20% ₹8,00,000 Rs.79920 For more details, please refer below link: https://www.mstock.com/margin-pledge For additional clarity, please refer to the video: https://youtu.be/ZuiIqz8asxc