Purpose -The high-frequency common-mode voltage introduced by power converters, using conventional modulation techniques, results in common-mode current that has the potential to cause physical damage to the shaft and bearings of electric drives as well as unwanted tripping of ground fault relays in motor drives and electrical networks. The paper aims to provide a complete elimination of common mode voltage using a matrix converter (MC) with a new modulation strategy that reduces the size of the power converter system considerably. Further, a new MC topology is proposed to eliminate the common mode voltage with improved voltage transfer ratio (VTR). Design/methodology/approach -The direct MC topology is selected, as it is the only converter topology that has the potential to eliminate common mode voltage in direct AC to AC systems. Using the rotating space vector technique, common mode voltage is eliminated but this reduces the VTR of the converter. To improve the VTR, a modified MC topology with a modified rotating space vector strategy is proposed. In addition, for improving the power factor at the input, the input current control strategy is developed. Findings -The use of rotating space vector technique eliminates the common mode voltage even under all input abnormalities like unbalance and harmonics. By applying positive and negative rotating space vectors, input power factor control can be achieved. However, the control range is limited from unity power factor to the output power factor. It is observed that in the current controlled technique the modulation index reduces further. It is also found that there is a reduction in switching stresses of individual switches in proposed topology compared to direct MC topology. Originality/value -In this paper, a modified rotating space vector technique is applied to the proposed converter topology for elimination of common mode voltage with an increased VTR. The topology can be used for common mode voltage elimination in existing electric drives without the need for modifying the drive system.