MTF in the share market: meaning, interest and charges

MTF, short for margin trading facility, lets you buy shares while paying only part of the price. Your broker lends you the rest and charges interest on the loan every day until you sell. Intraday leverage ends the same day. MTF lets you hold the shares for weeks or months.

How MTF works

1. You pick a stock from your broker's MTF list. Only stocks on that list qualify.
2. You pay part of the price. This part is your margin.
3. The broker pays the rest. That is a loan to you.
4. You pledge the shares to the broker as security for the loan. Most brokers do this for you when you buy.
5. You pay interest on the loan every day, from the day after you buy until the day you sell.
6. When you sell, the broker takes back the loan and the interest. You keep what is left, whether that is a profit or a loss.

How much you pay upfront

The margin depends on how risky the stock is. Two numbers from the exchange decide it. VaR is an estimate of how far the stock could fall in a day, and ELM is an extra buffer for unusual moves. At Zerodha, a stock that trades in F&O needs VaR + 3 × ELM upfront, and any other stock needs VaR + 5 × ELM.

For example, a stock outside F&O with a VaR of 5% and an ELM of 4% needs 5% + 5 × 4% = 25% upfront. On a ₹1 lakh buy, you pay ₹25,000 and the broker lends ₹75,000. Riskier stocks need more of your own money. Your broker's MTF list shows the margin for each stock.

What MTF costs

Interest is the largest cost, and each broker sets its own rate. Here is what ₹2 lakh of funding costs for 30 days at the six brokers in our broker comparisons:

Rates are as each broker published them on 20 October 2026. Some brokers charge a different rate above a certain amount, so check yours before you borrow.

To work out the interest and charges on your own trade, use the MTF mode of the charges calculator. Enter the price, the quantity, the share you pay yourself and the days you plan to hold.

You also pay these, using Zerodha's rates as the example:

• Brokerage of 0.3% or ₹20 an order, whichever is lower.
• ₹15 + GST to pledge the shares, once for each stock you buy on a day.
• ₹15 + GST to unpledge them when you sell.
• ₹50 + GST for each order if the broker has to sell your shares for you.

The usual charges on a delivery trade apply on top: STT, stamp duty, exchange charges, GST and the DP charge. What a stock trade costs explains each one.

What a 10% move does to your money

Say you have ₹25,000. You can buy ₹25,000 of a ₹1,000 stock outright, or use MTF at 25% margin to buy ₹1 lakh of it. You hold for 30 days and then sell. With Zerodha's rates, the MTF trade costs about ₹1,220 in charges, ₹900 of it interest. The paid-in-full trade costs about ₹70.

MTF at 25% margin multiplies every move by about four, in both directions. The interest also turns a flat month into a loss of about 5% of your own money. At 25% margin, a 25% fall in the stock wipes out everything you put in.

When the price falls

Your broker collects the loss on an MTF position each day. If the stock falls far enough, or the exchange decides it has become riskier, the broker asks for more margin. If you don't add money in time, the broker can sell your shares, and you pay its charge for doing so. Keep spare cash in your account while you hold an MTF position.

How long you can hold

Zerodha sets no limit on how long you hold an MTF position. Other brokers set their own rules, so check yours. Interest adds up the whole time. Six months of interest on ₹75,000 at 0.04% a day comes to about ₹5,500, which is 22% of the ₹25,000 you put in.

Before you use MTF

• Size the position on its full value, not on your margin. If you risk 1% of your account on a trade, work it out on the ₹1 lakh you hold, using the position size calculator.
• Add the interest to your break-even. The charges calculator has an MTF mode that includes interest and pledge charges for the days you plan to hold.
• Decide your exit before you buy. A stop loss matters more when MTF multiplies every move by four. Where to put a stop loss and GTT orders explain how to set one.
• MTF is different from pledging shares you already own. Pledging gives you margin for trading against your holdings, while MTF funds a new purchase. The glossary explains pledging and MTF in short.

MTF cost = brokerage + taxes + pledge charges + (amount funded × daily interest rate × days held)

Zerodha's rules and charges come from its MTF help page, checked on 24 October 2026. The other rates come from each broker's charges page as published on 20 October 2026.