20 December 2024
Online brokerage platform Zerodha's Chief Executive Officer Nithin Kamath on Thursday announced the launch of a new margin trading facility (MTF), which allowed users to buy delivery stocks by borrowing money from brokers.
In a social media post on X, Kamath highlighted his dilemma of launching a feature like MTF at a time of stock market volatility. MTF allows investors to buy stocks by paying a part of the total value. The broker funds the remaining amount and charges interest on this loan.
“I don't know if it is a good time with the fall in the markets, but we are finally launching MTF (margin trading facility) which allows you to buy stocks for delivery by borrowing money from us,” said Nithin Kamath in his post.
Kamath highlighted his concerns over customers ignoring the impact of the cost of borrowing and the risk of the trades going against their bets.
“I haven't been sure about this product for a long time because of obvious reasons. Customers who trade for delivery tend to ignore the impact of the cost of borrowing, and there's always the risk of the trade going against them, which leads to a bigger loss,” said Kamath.
Online brokerage platform Zerodha's Chief Executive Officer Nithin Kamath on Thursday announced the launch of a new margin trading facility (MTF), which allowed users to buy delivery stocks by borrowing money from brokers.
In a social media post on X, Kamath highlighted his dilemma of launching a feature like MTF at a time of stock market volatility. MTF allows investors to buy stocks by paying a part of the total value. The broker funds the remaining amount and charges interest on this loan.
“I don't know if it is a good time with the fall in the markets, but we are finally launching MTF (margin trading facility) which allows you to buy stocks for delivery by borrowing money from us,” said Nithin Kamath in his post.
Kamath highlighted his concerns over customers ignoring the impact of the cost of borrowing and the risk of the trades going against their bets.
“I haven't been sure about this product for a long time because of obvious reasons. Customers who trade for delivery tend to ignore the impact of the cost of borrowing, and there's always the risk of the trade going against them, which leads to a bigger loss,” said Kamath.
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