I took a position in Vadilal yesterday via TradingView, and by end of day, I converted it to MTF.
However, today I noticed that Vadilal doesn’t offer any MTF margin (1x), yet the system still allowed the conversion to MTF. I’m confused as to why it was permitted when effectively no margin benefit is provided.
As a result, the position now shows under MTF delivery, but I’m not getting any of the margin benefits. Will I still be charged MTF interest, even though no margin was utilized?
My query was, why Does MTF Include Stocks Without Margin Benefit?
I just noticed, like in the attached screenshot, that several stocks are available for MTF even though they offer no margin benefit (1x leverage). Why are these stocks included in MTF if no actual leverage is provided? It creates confusion, especially when there’s no advantage over normal delivery.
Hi @jaison, Thank you for bringing this to our attention.
If a scrip is approved for MTF (Margin Trading Facility) by the exchange, Dhan allows it for MTF usage. However, the actual margin or leverage available on such scrips is subject to daily assessment by our risk management system.
Just to add since Dhan has not provided any additional funding for the Vadilal position, no MTF interest will be charged. You can also convert this position to delivery at any time, as there’s no leveraged exposure being carried.
We understand your concern and appreciate the feedback. We’ll continue to refine the experience to make such scenarios clearer upfront.
If there’s no margin benefit, the stock should simply not be available under MTF. Listing it with 1x leverage is misleading and defeats the whole purpose of margin trading. It’s not right to call it MTF when it offers no actual margin, that’s just confusing for users.
No actually that is done for another purpose @jaison . Let’s say, I have 100% margins from pledge, so it will be impossible to buy it under Delivery tab since that requires only cash, but I still can buy it, if it is listed under MTF through pledge margins and no cash.
That is the whole purpose of it being listed under MTF. Both have 2 separate margin calculations. 2 SEPARATE PURPOSE.
Delivery = no pledge margin utilization.
MTF = pledge + cash utilisation, no matter the exposure 1x, 2x or 4x.
@jaison I understand you don’t need 1x MTF because you may not have an in-depth understanding or you simply don’t require it. Feel free to ignore such 1x MTF exposures, if you don’t need them. I need them. Please don’t force the team because even they might not understand the applications of 1x MTF in trading and remove it in haste.
Similar 1x exposures are given at AngelOne also, because of the fact, that you can buy it using pledge margins alone. As someone, who maintains at 60:40 margins across family group level, where 60% comes through pledge and 40% through cash, it is necessary to have the 1x MTF option for me.
These are intentionally kept this way. The max amount of stocks that can be offered under MTF, even if it is 1x, helps brokerages earn interest on pledge utilisation and helps customers, utilize their pledge margins fully.
@thisisbanerjee You can use pledged margin to buy stocks in Delivery on Dhan but yes only upto T+5 days post which you will go into an ageing debit. Do you generally hold your positions for longer? Just trying to understand here.
Suppose I am bullish on the auto sector so then I will take exposures in auto through auto cos and auto ancillary cos, so I create a good basket through MTF, and many stocks in them would have 1x MTF but that’s fine because that allows me to continue to invest in MFs and enjoy the pledge margins too
@jaison In case, you don’t wish to be holding the MTF product type, you can easily convert it to Delivery through the app and continue holding as long as your like. Kindly note this, since I thought that you might need to hear this, therefore by any chance it helps you.
Thanks for understanding. There are products which cater to various sections of traders and investors, that you don’t know and even I might not know. It is always good to have flexibility and various choices and options.
@thisisbanerjee thanks for the detailed perspective. I’d like to understand your use case more clearly, especially around 1x MTF.
From what I gather, you’re using 1x MTF primarily to make use of pledged margins instead of cash, even though there’s no leverage involved.
Could you please clarify:
How does 1x MTF help you over normal delivery when both offer no extra leverage?
Is the key difference simply that MTF allows you to use pledged margins while Delivery requires cash?
Are you paying any interest on 1x MTF positions if no leverage is drawn, but only pledged funds are used?
Appreciate your insights, I’m trying to understand how this approach is practically better for someone using pledges, and when one should consider it.
@Pranita Is this specific use case that @thisisbanerjee mentioned (using pledged margins to buy 1x MTF stocks with no leverage) a known and documented feature of Dhan’s MTF system?
If yes, could you kindly share a link or reference to any official documentation or help articles that explain this use case clearly? It would help a lot to avoid confusion for users like me who don’t use pledged margins and end up converting to MTF assuming some leverage benefit.
Because from a general user’s point of view:
If a stock shows 1x leverage (i.e. no margin benefit), and the user has not pledged any collateral, then converting to MTF adds no value and only creates confusion.
In such cases, should the system still allow the conversion to MTF by default?
I completely understand @thisisbanerjee’s use case now, and it’s valid for users utilizing pledges. But if the majority of users aren’t in that category, shouldn’t there be a warning or restriction unless pledged margin is actually being used?
Appreciate your inputs, and thanks again for the engagement.
Well @jaison Let’s say I have ₹1000 in my account and the margin composition is ₹600 from collateral and the other ₹400 from cash.
Assume, I only lever 150% of my portfolio (which is ₹1500) at any time, while also diversifying according to my screeners and setups.
Then, I have 3 positions worth ₹500 each, and while in position A and B, I get exposures of 2x or more, which is fine but on an exposure C, there is only 1x MTF but I need to get in that position C because it is in my strategy. Have to even though it is 1x.
Position A: 35% funds reqd.
Position B: 50% funds reqd.
Position C (1x MTF): 100% funds reqd.
Therefore, of total 150% or ₹1500 exposure following is my margin utilisation:
Position A: ₹150 margin
Position B: ₹250 margin
Position C (1x MTF): ₹500 margin
Total margin: ₹900 even though I have ₹1000 in my account (pledge + cash) for a total exposure of ₹1500 i.e. 150%
Hope that clear the air.
As for known documentation, I AM THE DOCUMENTATION. What else do you need?
I would also request you to get out of that Z broker mindset, it is literally poison to my money.
Majority of the users lose money i.e. about 90%. You mean to say for that 90%, I have to constantly struggle with warnings and systems moulded for that 90% who would never make any money probably?
System is clear, there is no margin and it clearly states 1x. Don’t assume anything any further. It also clearly states what is the buy value and what is the margin required. Next time, check these before placing an order, takes about 2 seconds to understand.
