If a stock you are holding under MTF (Margin Trading Facility) goes through a demerger, the position will not remain under MTF. It will be automatically converted to CNC.
After the conversion, you must maintain sufficient funds in your trading account to meet the margin requirement applicable to the CNC position.
What happens when an MTF stock goes through a demerger:
In the event of a demerger, the stock position held under MTF is automatically converted to CNC.
This means the position will no longer continue under the MTF framework. Once the conversion happens, the applicable margin requirement changes, and you must ensure that enough funds are available in your trading account to support the CNC position.
When a stock goes through a corporate action such as a demerger, the original MTF treatment may no longer apply. As a result, the position is shifted to CNC, and you are expected to maintain the required balance in your account after the conversion.
What should you do after the conversion:
Once the position is converted from MTF to CNC, check your trading account balance and make sure you have adequate funds available.
If sufficient funds are not available after the MTF-to-CNC conversion, the RMS team may intervene and square off the position to mitigate risks arising from insufficient margins.
What If?
| Scenario | What happens |
|---|
| I bought the stock under MTF before the demerger announcement | Even if the stock was originally purchased under MTF, it will be treated as CNC once the demerger takes effect. |
Last updated: 06 Apr 2026
Related Articles
What happens if an MTF stock changes from EQ to BE after taking a position?
If you have taken an MTF position in a stock and its category later changes from EQ to BE, the stock can no longer continue under the MTF product type. This is because MTF is available only for stocks in the EQ category. In such cases, FYERS takes ...
What happens if a stock gets suspended while I hold it under MTF?
If a stock held under Margin Trading Facility (MTF) gets suspended from trading on the exchange, it immediately becomes ineligible for MTF funding. Suspension can happen due to regulatory action, company non-compliance, merger-related announcements, ...
How is P&L calculated if I hold the same stock in both MTF and CNC?
If you hold the same stock in both MTF and CNC, the Profit and Loss (P&L) is calculated using the FIFO (First In, First Out) method. This applies irrespective of the product type used to buy the shares. Under FIFO, the shares bought first are treated ...
What happens when the stock leverage is reduced to 1x?
If the leverage on an MTF stock is reduced to 1x, it means funding is no longer available for that position under Margin Trading Facility (MTF). In such cases, the client must maintain the entire position value using their own funds. What happens ...
What Happens If I Fail to Maintain Sufficient Funds or Miss Payments in MTF?
At FYERS, Margin Trading Facility (MTF) allows you to trade with leverage, and with that comes the responsibility of maintaining sufficient margins and paying interest on time. If margin requirements are not met or interest dues remain pending, it ...