Margin trading facility in India hits ₹1.16 lakh crore: PPFAS MF explains broker risks and market trends

Margin Trading Facility (MTF) in India has grown substantially, with the total MTF book reaching ₹1.16 lakh crore as of December 2025, up from ₹24,920 crore in FY23, according to a note from PPFAS Asset Management.

Margin trading facility in India over 1 lakh crore: PPFAS MF broker risks trends

MTF allows investors to buy equities by paying only a fraction of the transaction value, while brokers fund the remaining portion and charge interest, typically ranging from 9% to 16%.

The MTF market remains concentrated among large bank-backed brokers, which account for roughly 50% of the market share.

Independent brokers such as Zerodha, Angel One, Motilal Oswal, and Bajaj Securities each hold about 5–6% of the market, with smaller brokers sharing the remainder.

PPFAS notes that credit and liquidity risk may be higher among these smaller players.

Under current regulations, brokers can fund positions using their own capital, borrowings from non-banking financial companies (NBFCs), or commercial papers. Banks face regulatory restrictions on margin funding, which may affect liquidity and funding flexibility.

Analysts have highlighted that market volatility could trigger margin calls and forced liquidation of leveraged positions, potentially increasing counterparty credit risk. Brokers typically employ risk management measures such as stock-specific limits and single-investor exposure limits to mitigate these risks.

PPFAS also outlined its approach to investing in broking companies through its Parag Parikh Liquid Fund. Exposure to bank-backed broking companies is capped at 5% of the fund’s portfolio, with any single company limited to 3%, below the industry average exposure of 11%.

According to the fund, these companies benefit from diversified income streams beyond MTF, including brokerage and distribution of mutual funds and insurance products, as well as liquidity buffers in fixed deposits and commercial papers. Parent bank support provides an additional solvency backstop.

The Parag Parikh Liquid Fund is an open-ended liquid scheme, suitable for investors seeking short-term income with relatively low interest rate and credit risk.

Its Riskometer, as of 31 January 2026, classifies the scheme as low to moderate risk, in line with the CRISIL Liquid Debt A-I Index benchmark.

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Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Readers should consult certified experts before making any investment decisions.