Model Margin Trading Agreement
Summary
This section establishes the legal framework for a Margin Trading Facility agreement between a broker and a client. It defines key financial terms such as initial margin, maintenance margin, and mark-to-market value to clarify obligations. The text outlines client warranties, broker representations, and procedures for monitoring positions and pledging securities. This section covers stamp duty implications, breach of agreement procedures, and termination conditions. It outlines notice requirements, arbitration mechanisms for disputes, and waiver provisions. Finally, it establishes client confidentiality obligations and includes execution clauses.
Text
“Initial margin” means the minimum amount, calculated as a percentage of the transaction value, to be placed by the client, with the broker, before the actual purchase. The broker will advance the balance amount to meet full settlement obligations.
“Maintenance margin” means the minimum amount, calculated as a percentage of the market value of the securities, calculated with respect to the last trading day’s closing price, to be maintained by the client with the broker.
“Margin Trading Facility” or MTF means and refers to the facility pursuant to which part of the transaction value due to the Stock Exchange, at the time of purchase of Shares, shall be paid by ______________(BROKER) on behalf of the Client on Client’s request, on such terms and conditions as contained in this Agreement.
“Mark to Market Loss” or “MTM Loss” means the difference between the purchase value of the shares and the marked to market value of these shares.
“Mark to Market Value of shares” or “MTM Value of Shares” means the value of shares calculated with reference to the previous day’s closing price on the Stock Exchange.
“Share/s” means and refer to the shares / stock / securities eligible for margin trading facility, as specified by the SEBI from time to time and approved by ______________(BROKER) for the purpose of granting MTF.
Place the initial and maintenance margin amounts as the Broker may specify to the Client from time to time, subject to requirements specified by SEBI.
Authorize retention of the shares with the broker upon the receipt of the same in the pay out from the Stock exchange till the amount due in respect of the said transaction including the dues to the broker is paid in full by the client.
To pay to the broker - brokerage, commission, fees, transaction costs, service tax, stamp duty and other taxes / expenses as are prevailing from time to time and as they apply to the Client’s account, transactions and to the Services that the broker renders to the Client.
On entering into this agreement and deposit of intial margin by the client, the _______________(Broker) undertakes to settle the obligation towards the Stock Exchange for and on behalf of the Client . The Client hereby agrees and authorizes the _______________(Broker) to make such payment on his behalf.
The margin facility shall carry interest at _% per annum payable ________.
The Client shall be free to take the delivery of the Share at any time by repaying the amounts that was paid by ______________(BROKER) to the Stock Exchange towards Shares... Alternatively, Client may at any time... choose to sell the Shares on the Stock Exchange...
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Source: SecMarx — Model Margin Trading Agreement. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.