Discount broker Trade Smart Online launched its margin funding arm Equimax on Thursday for customers looking to leverage and buy equities for the cash market.

According to a press release from the company, under EquiMax, a customer will get “exposure up to four times the cash balance for delivery. For example, if a customer has ₹1 lakh in his account, then he can leverage its position and still buy stocks up to ₹4 lakh.”

This facility will be currently available only on the NSE cash segment.

Ledger debit balance

Typically, margin funding comes by way of a short-term loan that a trader takes from his brokerage to fund share purchases which he cannot immediately fund himself.

Any funds borrowed this way attract an interest payment to the brokerage; Trade Smart Online will charge an interest of 0.05 per cent a day. If there is no ledger debit at the end of the day, no interest will be charged, the statement said.

The facility will be available on desktop, mobile and browser versions of the trading platform.

Margin funding facilities give traders access to temporary and long-term funding for cash market purchases.

“After the recent increase in lot size in the futures and options segment,” the statement added, “EquiMax will make it easier for smaller traders/hedgers to trade in the market.”

Vikas Singhania, Executive Director, Trade Smart Online, said, “We would leverage on the ₹50-crore fund size, with borrowings from banks and NBFCs, and are targeting a ₹200-crore book size by March 2017.”

The margin funding business in India is estimated as a $1-billion industry, which is entirely owned by traditional brokerage houses which have used this avenue to create a lucrative revenue stream. But discount brokers, who allow traders to transact on their completely technology-driven platforms at massively reduced brokerage costs, are only now entering this space.

Last month, competing brokerage Samco Securities launched its CashPlus margin funding business while the country’s leading discount broker, Bengaluru-based Zerodha, plans to enter this space too in the next few months.

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