Trade Smart Online looks to provide Rs 40 cr margin fund against shares

Trade Smart Online (TSO), which began offering margin against share funding a month ago, is targeting to fund about Rs 40 crore to its customers in current financial year. According to the discount broking firm, without marketing of its new product, it has funded about Rs 1.5 crore in one month.

Margin against shares is a value added service provided by TSO to its clients. Under this service, customers can pledge their shares and avail additional limit for trading against these pledged shares. The limit can be used for trading in the cash market, equity derivative segment and currency derivatives. There are about 850 stocks they accept for pledging purpose.

"We have launched EquiMax funding facility to provide margin funding to our customers looking to buy equities in the cash market. We are expecting to provide about Rs 40 crore fund during financial year 2015-16," said Vikas Singhania, executive director of TSO.

TSO currently has about 26,000 customers across India and daily traded turnover of the company is about Rs 2,500 crore.

Singhania said, "Industry estimates suggest that temporary customer funding book of brokers has grown to about Rs 6,000 crore now from Rs 4,800 crore about 10 months ago. Temporary customer funding involves short-term loans of 4-5 days, and are mostly availed of by retail investors facing a funding shortfall. Increase in the lot size of derivatives contracts has prompted retail investors to shift to the cash market and borrow more."

For the transparent transaction of margin fund, the company has made the entire process to pledge and un-pledge the shares paper-less and the process can be done online.

Singhania said, "To made entire thing transparent between us and our customers, we have put all the process online so that any misunderstanding will not create."

This service enables a customer with shares in his demat account, which he does not wish to sell, get margin against these shares by keeping them as collateral. To enjoy the margin benefit for trading the customer will have to maintain a certain cash component known as a cash collateral ratio. The cash is maintained to cover risk for the customers in case of margin obligation is to be fulfilled especially in the derivatives segment.