Short answer

You can use iRage’s Margin Trading Facility (MTF) to trade with borrowed funds. However, iRage may square off your MTF positions under specific conditions to manage risks. When this happens, you pay an auto square-off charge of ₹50 + GST for each position that gets squared off.

When iRage squares off your MTF positions

iRage will square off your MTF positions in these situations:

Your account goes into debit

iRage sends you notifications at 8 AM before beginning the square-off process.

Your positions get squared off if losses exceed 20% of your funded amount. For example, if you fund ₹50,000 and your losses exceed ₹10,000, iRage squares off positions proportionately to recover the debit balance.

Position losses reach 80%

iRage automatically squares off your position when losses hit 80% of the funded amount, even if you have sufficient balance in your account.

For example, if you buy a stock worth ₹100 where you fund ₹40 and iRage funds the remaining ₹60 (on which you pay daily interest), your position gets squared off if the stock price falls by more than 80% of ₹60. If losses exceed 90% of the iRage-funded amount and the position cannot be squared off in the market, iRage converts the position to CNC (Cash and Carry). This ensures the position is closed and prevents further losses.

Stock category changes

If a stock you hold under MTF is reclassified and removed from Group 1 securities, iRage will notify you on the same day. You can sell the stock during market hours or convert it to CNC (Delivery) by 4 PM.

If you don’t sell or convert by 4 PM, iRage will convert your MTF position to CNC on the same day.

Corporate actions

iRage squares off positions one day before the ex-date for specific corporate actions like mergers. This doesn’t apply to bonuses, stock splits, dividends, and rights issues.

For example, if a stock’s ex-date for a merger is 10th December, iRage squares off your position on 9th December. iRage may send you a notification before squaring off your position, at its discretion.

Priority order for squaring off positions

When iRage needs to square off multiple positions, it follows this specific priority order:

F&O positions with losses come first

iRage squares off Futures and Options (F&O) positions with losses first to avoid penalties or additional costs.

Combined F&O and MTF positions

If you hold both F&O and MTF positions, iRage follows this priority:

Both F&O and MTF positions in loss: iRage squares off the F&O position first

MTF in loss and F&O in profit: iRage squares off the MTF position first

MTF in profit and F&O in loss: iRage squares off the F&O position first

Both F&O and MTF in profit: iRage squares off the F&O position first

Using collateral margin

If you have sufficient collateral margin in your account and a debit balance due to MTF, iRage may not square off your positions. Instead, iRage utilises your collateral margin and charges interest on this utilised amount.

For example, if your account has collateral margin worth ₹10,000 and your debit balance is ₹8,000, iRage doesn’t square off positions. You pay delayed payment charges on the over-utilisation of collateral margin (₹8,000 in this case).

Recovering F&O debits

If your account goes into debit from F&O-related obligations but you have no F&O positions left to square off, iRage squares off your MTF positions to recover the amount.