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Margin Trading for NRI

Published on Monday, November 11, 2019 by Chittorgarh.com Team

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Margin Trading for NRI

Margin trading facility (MTF) is a service offered by brokers to stock market investors to buy shares by paying only a fraction of the total trade value. The broker funds the balance amount and charges interest on it. The fraction amount paid by the investor is called a margin.

A few brokers in India offer margin funding to non-resident Indians (NRIs). This includes Tradeplus.

Margin funding works in 2 ways:

  1. Cash Funding (Short term loan)
  2. Margin against Shares in the Demat Account.

Margin Trading is only available in select company stocks as predefined by SEBI and Exchanges. The margin percentage is also approved by the SEBI and stock exchanges. You can avail up to 75% of the trading value as margin amount.

Note: Each broker has his own payment terms, maximum loan duration and interest rates.


Normal Vs Margin Trading Difference

In normal trading, an NRI can place a buy order and the full trading value is debited from your NRI bank account once the order is executed. The shares are credited in your NRI demat account in T+2 days where T is the day of your trade.

In margin trading, you can place a buy order and only the margin amount is deducted from your account on order execution. The shares are credited to your demat account in T+2 days. The rest of the amount is funded by the stock broker as a short term loan to the investor.


NRI Stock Brokers offering Margin Funding

Broker

Brokerage

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Tradeplus 0.40% (NRE) and 0.30% (NRO) Open Account

Margin Funding Advantages

  1. It provides higher buying power with limited cash balance to NRI investors. It also helps them earn more profits with small investments.
  2. Positions can be carried forward up to T+N days with T being the day of trading and N being the number of days a position can be carried forward to. N depends on the stock broker's terms and conditions.
  3. Margin funding is regulated by SEBI and Exchanges.
  4. Up to 75% of the trading amount can be funded on select stocks.
  5. The margin amount can be paid in cash or against shares in the demat account.
  6. Stocks lying idle in the demat account can be used for margins.

FAQ's

  1. 1. Which stock brokers offer Margin Funding to NRIs?

    Currently, only Tradeplus offers the margin trading facility to NRIs. The facility is not available with other stock brokers.

    Discuss this question

  2. 2. How much margin funding can an NRI avail?

    NRIs can avail a maximum of 75% margin funding on some select stocks as approved by SEBI.

    The percentage of margin funding is predefined by SEBI and stock exchanges.

    Not all stocks are eligible for margin funding. Also, the extent of margin funding varies from broker to broker.

    Discuss this question

  3. 3. What is the trading segment for which NRIs can avail Margin Funding?

    The margin funding for NRIs is only available for the Equity Cash segment for selected stocks. Only stocks from NSE can be bought through this facility.

    Discuss this question

  4. 4. How can NRIs avail the Margin Funding facility?

    Currently, only Tradeplus offers the margin trading facility to NRIs. If you have an NRI trading account and NRI demat account with Tradeplus then you need to access it's trading software and activate the MTF trading facility. The MTF facility will be activated within 15 minutes and you're ready to place MTF orders.

    If you don't have an NRI trading account with Tradeplus then please follow the steps listed here to open a Tradeplus NRI account.

    Discuss this question

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