What is margin trading? To whom SEBI gave this big relief

If you invest in the stock market, then you must be aware of option trading, intraday trading. But do you know about margin trading? Recently SEBI has given a lot of relief to those who do margin trading. Read this news...

If you invest in the stock market, then this news is for you. Market regulator SEBI has recently made some changes in the rules related to margin trading, which is a big relief for traders. What is margin trading, what changes has SEBI made in the rules related to it. You will get its complete details here.

What is margin trading?

This is a facility where an investor can buy more shares in less money. By taking advantage of this facility, investors get up to 4 times the amount on loan from brokers. 

If a person has Rs 50,000 and wants to buy shares worth Rs 2 lakh, then you can trade by borrowing money from MTF (Margin Trading Fund). However, the broker charges you interest on the remaining amount.

SEBI gave this big relief

Now market regulator SEBI has issued a circular regarding margin trading. It says that now the shares that investors buy through margin trading and their stocks or equity exchange-traded fund (ETF) units deposited with brokers as collateral will be kept separate. In the calculation of the funding amount for margin trading, these two categories will not be calculated in a combined manner.

If the broker has taken cash collateral from the client in the form of margin to avail margin trading facility. Whereas the trading member has given cash collateral to the clearing corporation for settlement of the client. This will be considered as maintenance margin.

Investing in the stock market can be risky. That is why it is said that you should consult your financial advisors before investing in the stock market. TV9 Digital also gives you the same advice.