In which scenarios will the Pay Later position be liquidated?
Liquidation refers to the selling of assets such as stocks, bonds, or other securities into cash by the broker.
Your Pay later (MTF) position may be liquidated in following scenarios:
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Initial Margin: If the required initial margin for the position is not maintained
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Change in Leverage: In case leverage offered on the stock is reduced, the initial margin payable by you increases. If it is not met, it may lead to liquidation of your stocks.
For example: If you took a MTF trade with 4x leverage worth 1,00,000 with initial margin payable as 25,000. Now, if the leverage offered on the stock is reduced to 3x, the initial margin payable by you increases to 33,334. If this is not met, it may lead to a margin shortfall. Failure to add funds/collateral in case of margin shortfall may result in liquidation of your holdings -
Corporate Action: In case of Corporate action if the stock moves out of Pay Later list
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Removal of MTF from scrip: In case the stock is removed from list of approved stocks for MTF by Kotak securities or the exchange