What is MTM in Upstox? This article is for all those investors who are interested in understanding MTM shares? Here is a complete information to help you with Smart Stock Margin Trading.
Upstox is the leading discount broker in India, hence all you need to know is more about MTM.
What is MTM
MTM is a market-by-market method for measuring the fair value of volatile assets and liabilities. In terms of trading and investing, securities such as “futures” and “mutual funds” differ in the market to reflect their current market value.
In apostasy, MTM compares the actual market value of the security with the book value.
How MTM is Calculated
MTM is calculated daily and debited/added to your margin account. In a nutshell, MTM margin helps you determine whether you have enough margin or want more margin.
It becomes a positive and negative flower. An increase in the security price indicates a positive MTM, while a decrease in price indicates a negative MTM. Continue reading if you want to know more about Upstox MTM.
In MTM Upstox.
As mentioned earlier, with MTM stocks, you can measure the underlying market value of the securities. Original value and book value. The MTM margin is the distinction between the two.
How Upstox MTM Measures
Although Upstox MTM measures your business risk on a daily basis, you will receive actual margin calls only when your account balance falls below SPAN (Standard Portfolio Analysis Risk Level).
Cash Position on Upstox MTM
Available cash margin is stated as 20,000 and we work with F&O stocks. Since F&O pays 5x margin, the total exposure is 5×20,000, for example, 100,000 for an internal day.
Now, if an XYZ investor buys 100 shares for Rs 1000 and then sells these shares for Rs 100 to Rs 900.
He lost 10,000 (100 shares x 100).
If we compare this loss with its original commitment capital, this is it. 20,000, MTM would be 50% (20,000 – 10,000).
In this case, the customer would receive a warning from Upstox. In addition, MTM Upstox will continue to notify customers of an additional 10 losses.
When they reach 80, clients will need more exposure or start moving away from their open positions.
Upstox MTM Square Off Percentage
As mentioned earlier, MTM is not in a position to reach the 80 mark.
Here, it should be noted that the Upstox Risk Management Group (RMS) determines the MTM loss ratio.
In the event of a breach of the MTM ratio/scale, the risk management team is able to convert the client’s total position from 50 to 80 in the current cash limit.
However, the process is slightly different for Best Package users. The discount for these customers is 70. In addition, the exemption mainly applies to “bonds” and “commodities”.
Wondering if MTM (Market to Market) is interested in MTF (Margin Trading Facility) Upstox? Unfortunately, there is no such organization above.
No loan/margin is paid for stock valuation (subject to the trading facility).
However, if the client loses the shares purchased under MTM Margin Trading Facility (MDF) then he is required to charge an additional margin.