With MTF, you can buy stocks by paying a marginal amount, and ICICI Direct funds the rest. You can hold the position for up to 360 days as a leveraged position or pay back the remaining amount anytime to get the shares released in your demat account, also known as convert to delivery (CTD).

Let’s understand this with an example. Say you want to buy 1,000 shares of ABC Ltd. at ₹100 per share, but you have only ₹25,000 in your account, you can use MTF to increase your buying power to ₹1,00,000 with 4X leverage.

If price ABC Ltd. stock rises to ₹110 per share then:

If price ABC Ltd. falls to ₹90 per share then:

MTF is best suited for experienced investors who understand the risks of leveraged trading. But remember, since you’re trading with 4 times leverage, your gains as well as your losses can be amplified.  It requires active management of your positions and the ability to quickly respond to market changes. It is not suitable for risk averse traders.

Trading with MTF requires active management of your positions and the ability to quickly respond to market changes. If the value of your stocks (pledged shares) falls below a specific price or trigger price, your position will get squared off due to margin shortfall. So, you need to make sure your trading account always has sufficient margin / limits to avoid closure of positions. You can check the trigger price on your MTF positions page. 

There are 3 kinds of costs involved while transacting in MTF

1. Brokerage cost: The brokerage rate charged for MTF transactions is as per your existing delivery rates. This rate can go as low as 0.07%, depending on your brokerage plan. You can check you plan on Mobile App by visiting the Menu section -> At Your Service -> Brokerage Plan

2. Interest charges: Interest is charged on the funded amount availed for creating the MTF position. You will be charged interest daily for the number of days in MTF. The interest rate can be as low as 0.0265% per day (9.69% p.a) and can go up to 0.0561% per day (20.49% p.a), depending on the brokerage plan chosen. Don’t forget to factor in interest cost while calculating your potential returns or losses before exiting

3. Pledge Charges: To hold positions in MTF for more than a day, your shares have to be pledged. You are charged ₹20 +GST on every pledge instruction. This charge is applicable both at the time of pledge creation while buying stocks and at the time of selling the MTF positions for pledge closure / invocation.

When you create positions in MTF, interest is charged on the funded amount. This interest depends on your brokerage plan and can go as low as 9.69% p.a

Positions created in MTF can be held for a max holding period of 360 days. Any positions post the expiry date will be automatically closed/squared off. That means your MTF positions will be sold off.
Please note that, if your expiry falls on the weekend or trading holiday. The positions will be closed on the following day.

When you buy stocks in MTF, you only pay a portion of the total transaction value, with the rest being funded by ICICI Direct.

The portion that you pay is called Initial Margin and it varies from stock to stock depending on various risk parameters.

This margin can go as low as 25%, letting you buy stocks up to 4 times your initial funds.

Yes, the Initial margin used for creating positions in MTF is the same whether you use Cash or Shares as Margin limits.

The interest is charged only on the funded amount for your MTF transactions.

When you purchase stocks through Pay Later - MTF, you only pay the fraction of the transaction value also known as Initial Margin, with rest being funded by ICICI Direct

If you are providing the margin through cash, then the remaining value of the transaction is the funded amount.

Let’s say you create a position worth ₹10,000 in MTF. The initial margin for creating this position is ₹3000, then refer to the table below to understand the difference in interest applicable when using cash margin versus existing shares as margin (SAM limit)

Margin Trading Facility (MTF) allows you to buy stocks by paying only a portion of their price (margin), while the remaining amount is funded by ICICI Securities. This enables you to take larger positions with limited capital.

• You can hold MTF stocks for up to 360 days.
• Interest is charged only on the funded amount (the portion financed by ICICI Securities).

Example:

Let's say you want to buy ₹1,00,000 worth of shares under MTF:

• You pay 30% margin = ₹30,000
• ICICI Direct funds 70% = ₹70,000
• Interest is charged on ₹70,000 until you close the position.

All MTF orders can be tracked and managed through the Open Positions page:

Navigate to Stocks > Open Positions > MTF in your account.

After buying a stock through MTF, it will initially appear (on Website) under Stocks > Open Positions > Intraday until the market closes.

For viewing it on the ICICI Direct App, tap on Portfolio > Open Positions > MTF.

Here, all pledge-confirmed shares will be displayed until they are squared off or reach their expiry.

Managing MTF Positions:

All margin data or actions of your MTF positions can be accessed from here, from where you can track margin details, check pledged stocks, and initiate actions like adding margin or squaring off positions.

Keep an eye on the Trigger Price—if the stock price falls below this level, the system will automatically square off your position to manage risk. You can add margin to safeguard your position from being squared off.

Every MTF position has a Trigger Price, which is calculated based on the initial margin price at which you bought the stock.

If the stock’s Last Traded Price (LTP) drops below the Trigger Price, the system will check if you have any idle funds allocated to equity.

If sufficient funds are available: The system will first attempt to utilize those funds to maintain the position.

If no additional funds are available: The system will automatically square off your MTF position to prevent further losses.

It is important to monitor your Trigger Price and ensure you have adequate margin to avoid automatic position closure.

There are three different options under the Actions Column.

1. Sell
2. Add Margin
3. Convert to Delivery

Sell: The Sell option allows you to sell/square off/exit your position in the stock. You can select the quantity and the type of order(Limit/Market) and click on Square off to exit your position.

Add Margin: When the LTP( Last Traded Price) of the stock goes below the Trigger Price specified for the stock, the system will start to automatically close that position to the extent of shortfall in margin amount.
To prevent this you can select Add margin option and enter the amount you want to add to the position. This will reduce the Trigger Price of the position and ensure that your position is not automatically squared off.

Covert to Delivery(CTD): When a stock is bought in MTF, you can either hold it or pay the full amount and take delivery of the stock in your demat account before the expiry date.
Clicking on the 3 dots under the Action column shows the Convert to Delivery option. In this action, by paying the remaining outstanding amount you can take delivery of MTF position to Demat account.

CTD can be done on the same day before 3:30 pm or after the pledge confirmation for MTF position next day.

Yes, you will be eligible to receive any dividend paid by the company as long as the stock was held by you on the specified record date.

When you hold stocks under MTF, you are still the beneficial owner of those shares, even though they are pledged. As a result, any dividend declared by the company is credited directly to your bank account linked to your demat account.

Example:

• You buy 1,000 shares of XYZ Ltd. through MTF.
• XYZ Ltd. declares a dividend of ₹5 per share.
• Since you are the beneficial owner, you will receive ₹5,000 (1,000 shares × ₹5 per share) in your registered bank account on the dividend payout date.

Even though the shares are pledged for margin funding, the dividend does not go to ICICI Direct—it is credited directly to you.

MTF position can be converted to delivery from the MTF open positions page. Navigate to MTF(Pay Later) page by using the path: 

Stocks > Open Positions > MTF (Pay Later)

In this page you can find the details of all MTF position. 

Please follow the steps to convert your stock to delivery.

           1. Click on the 3-dot next to add margin present under the Actions Column.
           2. Enter the quantity that has to be converted to Delivery.
           3. Click on Convert Now

Please Note that you will be charged Rs 20+ GST as unpledge charges when you convert your stocks from MTF to delivery.

The details of the interest being charged can be found in the MTF open position page. Navigate to MTF(Pay Later) page by using the path Stocks > Open Positions > MTF (Pay Later)

If you hold MTF positions, click on Interest Details option to view interest details.

If you do not hold MTF positions, click on Interest On Outstanding Settlement Obligation to view the historical interest details.

Impact of different corporate actions on MTF position

Bonus Issue: In bonus issue, the company distributes additional shares to existing shareholders based on the number of shares already held by them.

Suppose ABC Limited announces a bonus issue in the ratio of 1:1. It means that for every share held by existing shareholders, they will receive one additional share as a bonus.

Stock Split: It involves dividing the existing shares of a company into multiple shares depending upon the Split Ratio. This effectively increases the number of outstanding shares in the market while lowering the price per share.

For example, if an investor holds 100 shares priced at Rs 100 each before a 2-for-1 split, they would own 200 shares priced at Rs 50 each after the split.

Impact on your Position: You will not be allowed to hold your MTF position during a Bonus/Split corporate action. You will receive a notification about the deadline up to which your position can be held. If you exceed the deadline, then your position will be squared off automatically.

In majority of the cases position can be held up to T minus 2 days with T indicating the record date of the issue. If you want the advantage of the bonus/split issue, then you can convert your position to delivery and hold the stocks on to the record in your Demat accout.

Trade to Trade: Exchanges move stocks to Trade-to-Trade (T2T) segment to prevent speculation and volatility of a stock. For stocks placed in this segment, Intraday trading will be prohibited and only delivery mode of transaction will be allowed.

The list of stocks moving to T2T segment are released by the Exchange.

Impact on your Position: As per our risk policy, stock placed in this segment cannot be held in MTF. We will inform you the time by which you can either square off your position or convert it to delivery. Post the prescribed time, your position will be closed by ICICIdirect.

Starting October 21, 2024, the maximum limit for creating MTF positions in a single stock will be ₹10 crore.

Please note that if you take a position over ₹10 crores limit, the following message will be shown: "EM not allowed for stock as Client wise stock wise position limit is breached." 

As per regulatory guidelines effective from August 23, 2024, any profit earned from Intraday, Bracket, and Pay Later (MTF) trades will be available for use only after market hours on the same day. The profit amount can then be used for trading on the next trading day (T+1 day) or for placing overnight orders.

Example:

On August 19, 2024, you bought stocks worth ₹50,000 using MTF.

On August 23, 2024, you sold them for ₹60,000, making a profit of ₹10,000.

Under the revised guidelines, this ₹10,000 profit will be added to your trading limits after market hours on August 23.

The amount can be used for trading only on August 24, 2024 (T+1 day).

No, the Additional Margin required / Shortfall amount is not available on the ICICI Direct App. However, you can check this information on the ICICI Direct website.

How to Check on the Website?

Log in to www.icicidirect.com

Navigate to Stocks > Open Positions > MTF

Here, you will find a stock-wise breakdown of the Shortfall Amount or Additional Margin required for your MTF positions.

Regularly monitoring this section helps ensure that you maintain sufficient margin to avoid position square-off due to margin shortfalls.

When you take multiple MTF positions in the same stock on different dates, each position is treated as a separate transaction with its own expiry date. The 360-day holding period is calculated individually for each transaction based on its trade date.

Example:

You buy 100 shares of Stock X under MTF on January 1, 2025. The expiry for this position will be December 27, 2025 (360 days from the exchange settlement date).

Later, you buy another 50 shares of Stock X under MTF on March 1, 2025. The expiry for this new position will be February 24, 2026 (again, 360 days from settlement).

Since both positions are independent, their expiry dates will differ. If you wish to continue holding the stock beyond the expiry, you will be required to Convert it to Delivery (CTD), or else the system will automatically square off the position on completion of 360 days.

Here are a few possible scenarios on why your MTF position might be squared off:

1. Pledge is not confirmed: When you buy stocks in MTF, you have to confirm the pledge through the mechanism setup by the respective depositories. If pledge is not confirmed by 10 PM on the trade date, the position will be automatically squared off/closed the next trading day

2. Position Expiry: You can hold the stocks bought in MTF for a period of 360 days. Any MTF position held for period beyond this time limit will be automatically squared off/closed.

3. Margin shortfall:

a. Every MTF position has a corresponding trigger price associated with it which can be viewed on the Open Position page -> MTF tab on Website or Mobile App.
b. If the LTP (Last traded price) of the stock falls below the Trigger Price, position will fall under margin shortfall.
c. Such positions will be automatically squared off/closed by the system unless sufficient margin is allocated in the Equity Segment.

Pledging is a mandatory process for stocks bought using MTF.

Starting 24th February, 2025, any position taken using MTF will be auto-pledged. It would mean that you will no longer be required to manually pledge your shares. Additionally, you will also not receive any link for confirming the pledge for MTF.

Yes, there will be a charge of ₹20 + GST for pledging or unpledging shares under Margin Trading Facility (MTF). These charges are applicable as per the guidelines of depositories NSDL and CDSL, and are applicable on a per-ISIN basis per instruction.

What is ISIN?

ISIN (International Securities Identification Number) is a unique 12-digit alphanumeric code assigned to each security (such as stocks, bonds, or mutual funds) for identification. Since the charges are applied per ISIN, if you pledge or unpledge multiple securities, the fee will be charged separately for each ISIN.

You can square off your pledged MTF positions as needed.

For e-DIS customers, the mandate process is as follows:

• On the Order Verification page, you will be redirected to the depository’s e-DIS mandate page.
• Complete the two-factor authentication by entering your MPIN and OTP.
• This mandate will authorize the selected stock for the transaction and remains valid for one trading day.

If you choose the Convert to Delivery (CTD) option:

• You can convert your MTF position to delivery from the Open Positions page.
• This can be done using the Convert to Delivery option after your pledge is confirmed.

What is e-DIS?

e-DIS (Electronic Delivery Instruction Slip) is a digital method of authorizing the sale or transfer of shares without requiring a physical DIS slip. It ensures a seamless and paperless way to transact, using a secure two-factor authentication process via MPIN and OTP.

What is CUSPA: CUSPA stands for Client Unpaid Securities Pledgee Account. It is an account maintained by the broker with the Depositories and is used for handling transactions related to unpaid securities.

Whenever you buy shares in MTF, you have to pledge those shares before 10 PM on trade day to continue holding the stocks in MTF.

If you miss out on confirming the pledge before the stipulated time period:

• Any unconfirmed positions in MTF will be auto pledged in favor of ICICI Direct CUSPA account.
• These unconfirmed MTF positions will be automatically square off/closed on the next trading day.

Example:
Suppose you purchase 10 shares of Yes Bank in MTF on 21st Jan, but were unable to confirm the pledge before 10PM.

• The 10 Yes Bank shares will be temporarily Auto pledged in CUSPA account, it will then be automatically closed by the system on 22nd Jan.
• You will also receive SMS from the Depository inform you of the CUSPA auto pledge and position closure process.