The Securities and Exchange Board of India (Sebi) plans to allow brokers to extend the margin trading facility (MTF) to equity exchange traded funds (ETFs).
MTF, also referred to as eMargin, helps overcome the problem of insufficient funding when placing delivery trades. The margin requirement is usually 25-75% depending on a stock’s volume and liquidity, implying a leverage of up to four times. The broker funds the margin, which can be settled later when the position is squared off.
