Several domestic broking firms have increased margins on the MTF (margin trading facility), also known as the BNPL (buy now, pay later) service, amid a spike in volatility in equity markets. Apart from the upcoming elections, sharp stock-specific falls have also prompted brokers to take this step, industry insiders told Moneycontrol.

MTF is an arrangement where investors borrow funds from brokers to purchase stocks. For instance, a client pays only Rs 25, but can buy stocks worth Rs 100. It is a product for the cash segment, and brokers charge anywhere between 7 percent and 21 percent on the borrowed funds.

Over the past week, IIFL Securities, ICICI Direct, Angel One, 5Paisa and Samco Securities have all increased margins on the MTF facility, said market participants.

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Moneycontrol has viewed client communications issued by IIFL Securities and 5Paisa. In the case of IIFL, the revised margin for acquiring a new MTF position was doubled from the earlier requirement. This was made effective from February 5.

On the other hand, Dhan has temporarily paused all fresh MTF buying. This was done due to expectations that market volatility would be high due to geopolitical tensions and upcoming elections, the company said on its X handle.

Angel One, Samco and ICICI Direct are yet to respond to our email queries.

Not all brokers offer this feature. Indias biggest brokers Zerodha and Groww do not offer MTF.

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