You can notice fluctuations in the Margin Trade Funding (MTF) range offered by your broker on stocks eligible for MTF during periods of market turbulence and stock-specific events. The broker determines the percentage of margin funding for equities depending on a number of factors, including:
1) The stock's risk profile, which includes its volatility, liquidity, price swings, market capitalization, and other factors. The broker will often approve a lower percentage of margin funding on such a stock the riskier it is.
2) The stock's regulatory environment, which includes the regulators' determination of the stock's suitability for margin trading, its inclusion on the Exchanges' list for surveillance and monitoring, any modifications to the settlement method, and the stock's adherence to the different margining rules.Â
3) The demand and supply of the stock, which includes the ease with which it can be borrowed or lent, the degree to which it is well-liked by traders and investors, and the mood of the market. In general, the smaller proportion of margin funding authorized on such a stock, the higher the demand and the lower the supply.
These characteristics may fluctuate based on market conditions, risk assessment, and broker discretion, and they may differ from broker to broker and from platform to platform.
Therefore, before using the margin trading facility or MTF, you should always check the most recent percentage of funding range for each stock.
To discover the best bargain for your requirements, you can also evaluate various offers and rates from other brokers and platforms.
