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Glossary · PSX term

Margin financing.

Margin financing lets you buy shares using borrowed money, putting up only part of the value yourself.

Definition

Through the Margin Trading System (MTS), a broker finances most of an eligible stock purchase while you provide a margin, usually at least 15%, paying mark-up of up to KIBOR plus 8%. Leverage boosts potential gains and losses and can trigger forced selling if prices fall.

Worked example

With MTS, you might buy Rs. 100,000 of eligible shares by funding Rs. 15,000 yourself and financing the rest.

Related on PSX Clarity

Term
Margin call
Term
Leverage
Term
KIBOR
Term
Futures contract

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