1. What is the difference between MTF and Margin Pledge?

The main difference lies in their purpose; MTF is used to buy new shares using borrowed funds, which have incurred interest, and Margin Pledge is used to pledge existing shares to get additional trading limits for different segments (like F&O) without incurring direct interest on the pledged amount.

2. What are the interest charges on MTF on Dhan?

Dhan offers a 4x leverage on +1700 shares, with interest charges starting from 12.49% per annum (about 0.0342% per day) on the borrowed amount of up to Rs. 5,00,000 to 16.49% for amounts above Rs. 50,00,000. The interest is charged daily from T+1 day.

3. What are the margin pledge charges on Dhan?

The margin pledge charge on Dhan is a flat rate of Rs 15 + GST per transaction per ISIN. Dhan does not charge any interest on the unutilised collateral margin received from pledging shares. However, if this margin is used for placing a trade and if investors fail to maintain the mandatory 50:50 cash-to-collateral ratio, an interest of 0.0438% will be levied on a daily basis on the utilised margin.

4. What is a haircut in Margin Pledge?

A haircut is the percentage difference between the actual market price of an asset and the amount of the collateral margin that a broker is willing to provide against it. This serves as a safety buffer for the broker and the exchange against sudden volatility in the market.

5. Is MTF allowed for all stocks in India?

No, MTF is not allowed for all stocks. To protect retail investors and to avoid systemic risk, SEBI has mandated that MTF can only be offered on stocks that are highly liquid as well as fundamentally stable stocks, officially classified by the exchanges as Group I securities. Dhan offers MTF on +1700 stocks with 4x leverage on them.