What is Buy Stocks Pay Later (BSPL)? Jainam Broking Ltd.

Investing in the stock market often requires a significant amount of capital, but what if you could Buy Stocks and Pay Later? This is exactly what BSPL (Buy Stocks Pay Later) enables traders to do. By leveraging Margin Trading Funding, traders can pay later while taking immediate advantage of market opportunities.

But how does BSPL work? Is it the same as a Margin Trading Facility (MTF)? This blog will cover everything from what is MTF in share market, how eMargin differs from traditional margin trading, and how you can use tools like the MTF calculator to estimate costs before making a trade.

1. Introduction to BSPL (Buy Stocks Pay Later)

What is Buy Stocks Pay Later?

Buy Stocks Pay Later (BSPL) is a facility where traders can purchase stocks without paying the full amount upfront. Instead, they pay later, leveraging funds from a broker to increase their buying power.

This facility is particularly useful for traders who:

✔️ Want to take advantage of short-term market movements.
✔️ Have limited capital but want to increase exposure.
✔️ Need liquidity while holding stocks for a longer period.

BSPL operates on the same principles as margin trading funding, where brokers lend funds to traders for stock purchases, and traders are required to maintain a margin balance as collateral.

2. Understanding Margin Trading & Pay Later Facility

What is MTF (Margin Trading Facility)?

Margin Trading Facility (MTF) is a trading mechanism where traders borrow money from brokers to buy more stocks than their capital allows. This allows them to take larger positions, leading to higher potential returns but also greater risks.

How is BSPL Different from Regular Trading?

Aspect	Regular Trading	Buy Stocks Pay Later (BSPL)
Capital Requirement	Full payment upfront	Pay a fraction as margin, borrow the rest
Risk Exposure	Limited to own funds	Higher due to leverage
Interest Costs	None	MTF interest rate applies
Ownership	Immediate ownership	Stocks remain pledged to the broker until payment is completed

Thus, BSPL (Buy Stocks Pay Later) is a form of margin trading, where traders can execute trades without full upfront payment.

3. MTF in Stock Market: How It Works

What is MTF in Share Market?

MTF in the share market allows traders to buy stocks with partial payment, while the broker funds the rest. This is known as margin trading funding, and it works as follows:

• The trader selects stocks eligible for MTF trading.
• They pay a margin amount (a small percentage of the stock’s value).
• The broker funds the remaining portion of the stock’s price.
• The stocks are held in the trader’s demat account but remain pledged to the broker.
• The trader can sell the stocks anytime, but they must clear the borrowed amount and interest before full ownership.

How BSPL Enables Trading with a Margin Trading Fund

Since Buy Stocks Pay Later is a form of MTF in stock market, it allows traders to leverage margin trading funding to increase their purchasing power. This makes BSPL ideal for traders who:

✔️ Want to enter the market quickly without full capital.
✔️ Are confident in short-term price movements.
✔️ Are willing to manage MTF interest rate costs.

4. E-Margin vs. MTF: Key Differences

What is E-Margin, and How It Differs from MTF Trading?

E-Margin and MTF trading are often confused, but they are distinct.

Feature	E-Margin	MTF Trading (BSPL)
Leverage	Moderate	Higher
Ownership of Stocks	Full ownership	Stocks pledged to broker
Interest Rate	Lower or none	MTF interest rate applies
Risk	Lower risk	Higher due to leverage
Holding Period	Longer holding allowed	Limited holding period

When to Choose E-Margin vs. Buy Stocks Pay Later?

• Choose E-Margin if you want longer holding periods with moderate leverage.
• Choose BSPL (MTF) if you want higher exposure but can manage risks and interest costs.

5. Cost & Charges: Understanding MTF Interest Rate

How MTF Interest Rate is Calculated?

The MTF interest rate is the cost traders pay for borrowing funds. It varies based on:

✔ Broker policies
✔ Stock category
✔ Holding period

Example Calculation

If a trader buys ₹1,00,000 worth of stocks using Buy Stocks Pay Later with a margin trading fund, they may need to pay only ₹25,000 up front, while the broker funds ₹75,000.

If the MTF interest rate is 14% per annum, then:

(₹75,000×14(₹75,000 × 14%) / 365 = ₹28.76 per day(₹75,000×14

Holding for 30 days will cost:

₹28.76×30=₹862.80₹28.76 × 30 = ₹862.80₹28.76×30=₹862.80

Thus, it’s crucial to use an MTF calculator to estimate costs before entering trades.

6. Using an MTF Calculator to Plan Trades

What is an MTF Calculator, and How It Helps Traders?

An MTF calculator helps traders estimate:

1. Margin requirement before placing an order.
2. Total interest cost based on the MTF interest rate.
3. Profits or losses after deducting interest and trading fees.

How to Use an MTF Calculator?

1. Enter the stock price and quantity.
2. Input the broker’s margin funding ratio.
3. Set the holding period.
4. The calculator will estimate interest payable and total cost.

This helps traders avoid unnecessary interest costs and plan their Buy Stocks Pay Later strategy efficiently.

7. Steps to Avail BSPL (Buy Stocks Pay Later)

Eligibility & Account Setup

• Open a trading and demat account with an MTF-enabled broker.
• Complete KYC verification and activate the Buy Stocks Pay Later feature.

Funding Process & Margin Requirement

• Deposit minimum margin money.
• Select stocks eligible for margin trading fund.
• Broker funds the remaining amount, and trading begins.

Risks & Best Practices for MTF in the Stock Market

✔ Avoid excessive leverage to reduce risks.
✔ Monitor MTF interest rate to control costs.
✔ Use an MTF calculator to plan trades effectively.
✔ Ensure timely repayment to avoid forced liquidation.

Conclusion:

Buy Stocks Pay Later (BSPL) allows traders to enter the market with partial capital and pay later, offering flexibility and increased exposure. While MTF in the stock market enhances opportunities, managing MTF interest rates and margin trading funding is crucial.

At Jainam Broking Ltd., we provide seamless MTF trading, competitive margin funding, and an MTF calculator to help traders plan efficiently. With transparent pricing and expert support, we empower traders to trade stocks on margin with confidence.

So, are you planning on trading in the Margin Trading Facility? If yes, you are at the right place! 

Open a Demat Account with Jainam Broking Ltd. Now!

1 users read this article