MTF Update: Temporarily pausing fresh investments via MTF on Dhan

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Hello Traders,

As you are aware, Indian Stock Markets are at its all time highs. We have seen a sharp correction over the last few sessions attributing to various factors such as earnings degrowth and margin pressures in select heavyweight stocks, rising bond yields in US, China’s GDP contracting to touching multi decadal lows and also the ongoing geopolitical tensions in the Middle East & Ukraine. Along with the interim budget coming up and elections held in India as well as the US, we expect the market volatility to go up or continue for a while in the near future.

At Dhan, we’ve noticed a substantial upswing in total trades per user and a substantial increase in overall trading & investing behaviour, mirroring the trends in the broader indices as they have made new highs. To add to that, historically it has been observed that higher leverages lead to more trades in the markets, many times prior to sharp corrections, resulting in traders losing money when the market turns adverse.

Considering all of the above factors, we feel enabling more leverage is not going to be in the best interest of our users. Thus, after a long and careful deliberation, as a prudent risk management measure, we have taken a call to temporarily pause fresh buying in MTF with immediate effect. While we acknowledge that this decision may pose some short-term inconvenience for all of our users who have been thoroughly enjoying the MTF experience, we always believe in safeguarding the long-term interests of our users at Dhan.

Please be assured that we continue to watch the markets closely, and will bring MTF back the moment volatility seems to have settled and we feel comfortable with reintroducing MTF to our clients. In case you already hold MTF positions with us, you can continue to hold the same or square those off without any hassle from your Dhan App or Web.

As markets continue to be near all time highs along with highly volatile movements in trading sessions, we advise all our clients to be mindful and practice caution in all forms of trading, and specially in options trading. We hope for your understanding regarding the rationale behind this decision and request your continued support.

As a team, all of us at Dhan continue to build and ship an incredible investing & trading experience for you in the coming year. We are excited about 2024 and have made our roadmap for this year available for all.

Best Regards,
Kuldeep

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This decision will affect swing traders who use your platform because of MTF. (Dhan interface is great but i do not welcome this decision).

If this limitation stays for long then unfortunately many have to migrate to some other brokers.

Many traders/investors treat this profession as a business.

please give us a timeline to resume the MTF @kuldeep @PravinJ .

You are trying to bring serious traders/investors to your platform but this decision is quit opposite to your mission statement.

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I also feel this is a retrogressive step.Honestly, I was not aware of MTF before using Dhan. I liked it very much and it was great for swing traders. Hope you understand this and come up with a timeline to resume it.

One more suggestion rather than closing MTF facility, try to match your interest rates with plateforms like m-stock. I think with that more number of swing traders will join Dhan.

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Very good decision, allowing people to trade BTST as well as holding stocks for long term in Margin with is adding to the froth in the markets.

People who are opposing their decision, let me tell you that they are thinking for the long term. They don’t want majority of the beginner traders to blow up their account, and then not have any customers at all in the future. I understand professional and risk taking traders might be inconvenient, but most of Dhan’s business comes from brokerage of new traders.

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I understand you are a professional trader, but why can’t you trade with your own money instead of borrowed money.

Not trying to paint everyone as a beginner, since I am one myself, what I am saying is that most of Dhan’s users are beginner-intermediate, and Dhan does not want them to blow up money they don’t have. Simple as that. See, if Dhan gives you 3x leverage on your 1 Cr capital, they are taking risk of 3 Crore of their own capital.
What if they are not able to recover their money? They can’t go to homes of 10k+ defaulters and try to get the money back.

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Our MTF trades and positions have grown very quickly and in a very short time frame, which is a the reason our risk team continues to assess the same from time to time. As @kuldeep has mentioned in original post, markets are expected to be volatile, and being over-leveraged positions aren’t good in such times.

Our MTF book has grown significantly in just 12 months and as @Lelouche mentions its a risk not just users but also Dhan carries. A wrong move in capital market is good enough to wipe-out a trader, and yes - at times even the broker; there have been couple of situations like this. Running a stock trading business isn’t easy.

Our Risk team continues to assess this, and we hope to be back with MTF soon.

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MTF was one of the reasons I migrated to Dhan from Zerodha (even though I still feel safer at zerodha and think they’re technically more reliable). And this decision will take me to other brokers for sure.

Having said that, the decision and the reasons for the same is beyond ridiculous. Why in India do we have people who think that grown up adults cannot make decisions for themselves and we need regulators to do everything for us?!

If you wanted to take risk management measures for Dhan (saying that you’re doing this for customers is anyway a grift), you could have reduced the leverage for few weeks (like IciciDirect did) or could have limited it to specific customers (for example only for those having account with Dhan for more than 3 months to be qualified for MTF)

Regardless, I move on. Had a great time with Dhan and it’s wonderful customer service team. @PravinJ

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People like you are the reason India can’t have free markets (or anything good for that reason). If you can’t side with the good, the best you can do is to not promote more regulations

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What? How do you think borrowing other’s money for trading is a good thing to do? Mostly it is manipulating the market with paper volumes and paper money. Though the scale Dhan is at, it doesn’t affect.

Regulation? Dhan is not a government subsidy, anything they do is for the good of their own business. You have 5% stoploss on the trades you make, that is not a regulation, that is risk management.

This MTF stoppage is risk management done by Dhan.

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Oops. now i migrated another brocker.

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Taking loan and using it for buying risky assets in stock market is a bad idea unless u r sure u can service the loan. 1% make the cut as significantly profitable traders. For the rest unless u have another source of steady revenue stream debt financing of stock market investment or trades is a near sure shot way of financial ruin. Broker is also at risk if there is a significant MTF crowd with high risk profile.

The bull market euphoria can hide the market reality - what went up can also go down and stay there for a significant period of time.

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This is my personal view - the amount of volatility in markets at this moment is very high, a day like today isn’t good for holding leverage positions. Leveraged positions are generally good when markets are going up or are side-ways, I am paying for interest costs… on a day like today - I am in losses & also paying interest. Of course no one can predict markets.

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Yes general risk management view.

Not good or bad for me. For Dhan, some short term client exodus may happen.

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Why not reduce the margin provided. Say, instead of 4x, give 2x. Or, limit it to certain stocks - NIFTY 50 only? That, in my view, should be good enough risk management.
Or, is your system currently not configured for this flexibility?

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This is not justified. As long as our account is sufficiently funded especially. You can ask to maintain M2M balance. You have done the same this Saturday as well, where other brokers were allowing it. @kuldeep @PravinJ. Everytime you keep talking about the interest of the users where actually you are convinienbtly safeguarding your own interests. I guess you guys have become complacent and the best alternative is to change brokers.
Everyone here, I recommend MSTOCK. They never create nuisance and on lifetime payment of Rs.2500, there is no brokerage accross segments including Intraday and F&O

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yES .I JUST OPENED ACCOUNT

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I’m not trying to be disrespectful, but why are thinking yourself to be an all-time-great market analyst and making decisions for others. (I’m personally bearish and now in 92% cash)

You guys(brokers) anyway have the right to liquidate/sell positions when your fund is at risk

I don’t know why there are so many people in India who try to play others (and their capabilities) down

Kindly check out my account (I will dm you the details should you wish)and how I have used leverage/mtf

(You all old school technical analysts are amusing - most of the money is made when market is trending, but whenever any stock goes up, our regulators and brokers makes it hard to buy it, be it circuits or BE or unavailability of mtf for the said stock. You might genuinely think you’re helping the retail investors/traders but you’re doing the complete opposite)

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I am using Dhan because of MTF, so MTF will not available for more than 6 months, up to election.
Opps really missing you dhan.
Even though intrest rate is higher in dhan, I prefer dhan.
Really disappointed.

Dear friends, Anybody using HDFC sky or kotak, please suggest good platform with MTF

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Is MTF available in Mstocks?

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Yes. Available in mstocks

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