Introduction for Margins

Margins Explained: Leveraged Account

There are two types of leveraged accounts and they can be downgraded or upgraded at any time: Portfolio Margin and Reg T Margin. The account kind is selected during the account opening procedure. The Portfolio Margin accounts need a lower level of margin (increased leverage) for securities than the Reg T Margin account. Nevertheless, for specific portfolios, the Portfolio Margin account’s leverage will be minimized due to high risk levels, because the Portfolio Margin’s estimation takes into consideration the portfolio level of risk based on all the positions, the Reg T Margin’s estimation is per position.

Investors can compare their current margins of their investment portfolios with those of a Portfolio Margin account by pressing the “TRY PM” button in the Account Window in the trading platform.

Securities margins are different from those of commodities. While securities margins are the amount of cash that the investor borrows, the commodities margins are the amount of cash that the client must “put aside” in order to maintain the positions.

The Explanation of Margin for securities in reference to securities, the explanation of margin adds three important terms:

The margin loan: The margin loan is the amount that the investor borrows from the broker in order to acquire the securities.

The margin deposit: The margin deposit is the amount of equity that was supplied by the investor in order to acquire the securities in a leveraged account.

The margin requirement: The margin requirement is the minimum amount that the investor requires to deposit, and is indicated as percentages of the latest market value or the transaction.

The deposit can be larger or the equivalent to the margin requirement.

As can be seen in the following equation:

Margin Loan + Margin Deposit = the Market Value of the Transaction<>br>
Margin Requirement =/< Margin Deposit

If an investor is interested in trading on margin, he must first open a margin account and sign all of the associated agreements. While trading on margin, an investor must always follow the brokers’ margin rules and demands. Failure to do so may require the client to deposit additional funds or close a part or all of his positions.

“Maintenance Margins” and “Initial Margins”

The federal Reserve and self-regulatory corporations (SRO’s), such as FINRA and NYSE, have clear laws as to leverage trading. While trading using an American broker, the “Regulation T” rule grants investors the right to borrow up to 50% of the value of acquired securities. The cash amount that the investor must pay for the securities is called “Initial Margin”.

The second type of margin is known as “Maintenance Margin”. Regulation depends on every leverage account to hold a maintenance margin of at least 25% of the investor securities value. Day traders in the US markets have a minimum requirement of at least $25,000 or 25% of the securities value in the account if it surpasses $25,000.
If at any given time an account falls under the maintenance margin requirement, the client must deposit funds into the account, or close some of his positions in the account. The brokers can also specify their requirements for minimal margins, which are known as “the house requirements”. Some brokers choose to moderate the terms of the loan more than others, and the terms of the loans may vary from one client to the other. However, the brokers must always operate in the course of the guidelines of the margin requirements which were positioned by the regulators (such as FINRA). Not all securities can be leveraged.

Buying with leverage may potentially be a “double edged sword” that can translate into increased profits or increased losses. In the inconsistent markets, investors who borrowed from their broker, may be required to provide more margin if the price of the share changes fast. In these scenarios, the broker may change the margin requirements after sending a warning email. This is the reason why keeping track of your account while trading on margin is very important.

Leveraged Commodities Explained

The margins for commodities are the amount of equity that was supplied by the investor in order to support the futures. The margin requirement for futures and future options are estimated according to an algorithm that is called SPAN. SPAN (the analysis of a regular leveraged portfolio) calculates the risk in the portfolio by estimating the worst case scenario that a varied portfolio may fairly lose throughout a defined period of time (Usually one day).

This is done by estimating the profits and the losses that may occur in different market conditions. The most essential part in the procedure of the SPAN is the display of risk, which is a set of numeric values that calculates how a certain futures shall profit or lose under certain circumstances. Each scenario is known as a “risk scenario”.

Maintenance Margins for Commodities and Initial Margins

Similar to securities, commodities also have maintenance margins and initial margins. These margins are frequently set by the exchanges as a percent from the futures which is based on the price and the instability of the futures. The initial margin requirement for futures is an increased amount that an investor has to apply as collateral in order to open a position. In order to be able to buy futures, an investor must meet the initial requirement of the margin.

Commodities maintenance margin is the amount an investor must manage in his account in order to support the futures, and it serves as the lowest value to which the account can reach before the investor is required to deposit more funds.

Commodities positions are checked on a daily basis, and the account is arranged to each profit or loss that materialized. Considering the price of basic commodities changes, it is viable that the value of the commodities may fall to a point that the balance of the account collapses below the required value for maintenance. In such a case, the broker might close some of the positions in the account.

Real Time Margins

MEXEM uses real time margins in order to authorize the investor to control and be aware of the account level of risk. The margin system checks the needed margin for the account every few seconds and takes new and existing positions under consideration, in order to avoid losses from investor’s side as well as from the broker’s side, which permits MEXEM to take such minimized commissions. At any time, one can check your required margins from the Account Window on the trading platform.

Universal Accounts

Your account permits you to trade in securities and commodities/futures on the same account. Consequently, it is composed of two accounts; the securities account; which is subject to the laws of the U.S. Securities and Exchange Commision (SEC), and a futures account; which is subject to the rules of the US commodity Futures Trading Commission (CFTC).

If you have assets in the futures account or in the securities account, these assets are shielded by the federal regulations and by the U.S. law that decide the manner in which the brokers most protect the property of the investments. In your securities account, your assets are shielded by the laws of SIPC and SEC, and in your futures account your assets are shielded by the laws of CFTC, which request that the funds of the client be separated from the broker private capital.

As part of our client service, all accounts in MEXEM are authorized to automatically transfer the required funds between the futures account and the securities account in order to run your margin needs. In the page “Excess Fund Sweep” in account management you can determine how you want MEXEM to handle the transfer of excess funds between the accounts.

Essential Margin Models

The most frequent model for margin is the “Reg T Margin” account which considers every position as an individual position, meaning that the margin is estimated per position, with the deviation of option strategies.

The second model is the “Portfolio Margin” account which estimates a level of risk for all of the positions in the account. Therefore, if you invest in a stock from a certain sector and sell another stock from the same sector, the margin estimation might take that into consideration and lower the margin requirements for the two positions.

Other models are used in various situations. For example, if a particular stock is highly unstable, shorting it might need more than 100% of the value of the trade due to others fees that the investor is required to pay in order to keep the position (borrow fee for example).

Margin Estimation for securities

Estimating Margins for securities in Reg T Margin accounts:

During the trade

In real time during the trade day

At the end of every trade day

After the trading day

It is essential to remember that the estimation of the securities that we achieve in the preliminary “Reg T” accounts are achieved at the end of the day (at 15:50 EST) as part of MEXEM’s Special Memorandum Account (SMA). We achieved the estimations of margins in real time and throughout the trading day.

Furthermore, in order to comprehend the closure of transactions by MEXEM you can use the following estimations:

Estimating the Margins in regards to the trading time:

While opening a new position we apply:

  • The initiation and minimal requirement for equity.
  • Researching the leverage for existing transactions.

The basic margin requirement:

To open a new position in a leveraged account, it is required that you have a minimum amount of $2,000. If you don’t meet this basic requirement, then you cannot open a new position.

Introductory margin estimation time: Upon a submission of an order, a real time check of funds that are available in the account is organized. The order shall be completed if there is enough money in the account. The amount of available funds must be greater than the basic margin requirement.

Estimating the margins in real time

Throughout the trading day, we complete different estimations in real time regarding the margins in your account. These are the estimations that are achieved for the margins during trading time:

  • Real-Time Maintenance Margin Calculation
  • Real-Time Position Leverage Check
  • Real-Time Cash Leverage Check
  • Real-Time SMA Calculation
  • Soft Edge Margining (SEM)

Maintenance margin estimation in real time

MEXEM’s Real-Time Maintenance Margin estimations for securities are pictured below. The maintenance margin used in these estimations is the maintenance margin requirement, which is recorded on the product-specific Margin pages. In the estimations below, “Excess Liquidity” indicates excess maintenance margin equity.

Analysis of Real-Time Gross Position Leverage

You can investigate the leverage in real time in order to ensure that the securities gross position value doesn’t surpass the net liquidation value minus the future options value by more than 50 times. This constraint is designed to constrain the risks that are involved in extensive transactions.

Analysis of Real-Time Cash Leverage:

An increased leverage analysis on cash is made to guarantee that the total FX settlement value exceeds no more than 250 times the Net Liquidation Value as shown below.

Reduced Marginability Estimations:


Reduced Marginability Estimations:

We shorten the marginability of stocks for accounts holding concentrated positions in regard to the shares outstanding (SHO) of a corporation. For Margin securities accounts, this method increases the margin needed for stock positions surpassing 1% of the published SHO from its default to 100% (in other words, decreases the amount of money that can be borrowed against a stock position towards zero). At 5% concentration, positions have a 100% margin prerequisite.
Large bond positions relative to the issue size may generate an increase in the margin requirement. The revaluation of bond marginability is done systematically to acknowledge redemptions and calls, as well as other aspects, which may influence the remaining liquidity of the specific bond instrument. Less liquid bonds are given less positive margin attention.

SEM:

We will automatically liquidate when an account drops under the minimum margin requirement. However, to authorize a customer the capacity to maintain risk prior to a liquidation, we estimate Soft Edge Margin (SEM) during the trading day. From the beginning of the trading day until 15 minutes before the end of the trading day, Soft Edge Margin permits for an account’s margin shortfall to be within a specified percentage of the account’s Net Liquidation Value, presently 10%. When SEM ends, the entire maintenance requirement must be met. When SEM is not useful, the account must meet 100% of maintenance margin.

Soft Edge Margin beginning time of a contract is the latest of:

  • The market open, the latest open time if recorded on numerous exchanges.
  • Or the beginning of liquidation hours, which are based on the asset category, trading currency, exchange and product.

Soft Edge Margin end time of a contract is the earliest of:

  • 15 minutes before market closing, the earliest closing time if recorded on numerous exchanges.
  • Or 15 minutes before the end of liquidation hours.
  • Or the start of Reg T enforcement time.

If an account drops under the minimum maintenance margin, it will not be automatically liquidated until it drops under the Soft Edge Margin.
This allows a customer’s account to be a margin violation for a short period of time. Soft Edge Margin is not present in Trader Workstation. Once the account drops under SEM however, it is then needed to meet full maintenance margin.

SMA and the estimations of the end of the day

Real Time SMA

On a real-time basis, we inspect the balance of a special account associated with your Margin securities account known as the Special Memorandum Account (SWA). We estimate a running balance of your SMA throughout the trading day, then carry out Regulation T basic margin requirements at the end of the trading day. No cash withdrawal will be authorized that causes SMA to go negative on a real-time basis.

Estimations of End of day SMA

As mentioned above, we estimate SMA in real time throughout the trading day, but we carry out Regulation T basic margin requirements (usually 50% for stocks) at the end of the trading day. Whenever you have a position change on a trading day, we inspect the balance of your SMA at the end of the US trading day (15:50-17:20), to guarantee that it is larger than or equal to zero.

We use the following estimation to estimate your SMA balance in real time and put in Regulation T basic margin requirements to securities that can be obtained on margin. Note that this is the same SMA estimation that is used throughout the trading day. In the first estimation, “today’s trades basic margin requirements” are applied to SELL orders and subtracted for BUY orders, and are based on US Regulation T Basic Margin requirements.

The SMA Rules:

The SMA is estimated according to the following laws:

  • Cash deposits are credited to SMA.​
  • Cash withdrawals are debited from SMA.​
  • Dividends are credited to SMA.​
  • Trades are netted on a per contract per day basis:
    • Realized pnl, i.e. day trading pnl are posted to SMA.
    • Commission and tax are debited from SMA.
    • All trades (one per contract) are posted to the portfolio at the end of the trading day, if RegTMargin of the portfolio increases, the increased amount is debited from SMA, if RegTMargin of the portfolio decreases, the decreased amount is credited to SMA. The current price of the underlying, if needed, is used in this calculation.
    • Option sales proceeds are credited to SMA.
    • Premiums for options purchased are debited from SMA.
    • The change to SMA resulting from trades is effectively the change in RegTEquity minus the change in RegTMargin.

  • Universal transfers are treated the same way cash deposits and withdrawals are treated.
  • Market appreciation: If Reg T Excess of a margin account is greater than SMA at the close (normally 16:00 US/Eastern), SMA is set to equal to Reg T Excess. Note that SMA balance will never decrease because of market movements. Reg T Excess = 0 or (RegTEquity – RegTMargin), whichever is greater.
  • Currency trades do not affect SMA.
  • Fees, such as order cancellation fee, market data fee, etc. do not affect SMA.
  • Exercises and assignments (EA) are reported to the credit manager when we receive reports from clearing houses. They will be treated as trades on that day. For example, on expiration, we receive EA notices on the weekend; these trades have Friday as trade date in the clearing system, but they will be treated as Monday’s trade for SMA purposes by the credit manager. Exercise requests do not change SMA. DVP transactions are treated as trades.

Overnight Margin Estimations

Stocks have increased margin requirements when held overnight. For overnight margin requirements for stocks, click the Stocks tab above.

How to calculate the final stock price before we start to liquidate the position?

Use the following series of estimations to calculate the last stock price of a position before we begin to liquidate that position. Note that this estimation applies only to single stock positions.

How much stock do we liquidate?

As indicated on the Margin Calculations page, we estimate the amount of excess Liquidity (margin excess) in your Margin account in real time. If your excess Liquidity balance is lower than zero, we will liquidate positions in your account in order to bring the Excess Liquidity balance up to at least zero.

You can use the following estimation to regulate how much stock equity we will liquidate in your Margin account to bring your Excess Liquidity balance back to zero. Note that this estimation applies only to stocks.

Margin estimations for commodities

We apply margin estimations to commodities as mentioned below:

At the time of a trade

In real-time throughout
the trading day

Real-time liquidation

50% margin benefit

You can keep track of most of the values in the estimations described on this page in real time in the account window in Trader Workstation (TWS).

Time of Trade Margin Estimations

When you open a new position, we apply the following:

  • Lowest Basic Equity Requirement
  • Time of Trade Initial Margin Cal

Lowest Basic Equity Requirement

It is necessary to have a minimum of $2,000 or USD equivalent of commodities NET Liquidation Value to open a new position. In a commodities account, you can meet this requirement with assets in currencies rather than your base currency. If you do not meet this basic requirement, we will attempt to transfer funds from your securities account to meet the requirement when a trade is received.
If you do not have the minimum of $2,000 or USD equivalent of commodities Net Liquidation Value, or if you cannot meet the basic minimum equity retirement, you will not be able to open the new position in your commodities account.

Time of Trade Basic Margin Estimation

Upon submission of an order, a check is made opposed to real-time accessible funds. If accessible funds, after the order demand, would be larger than or equal to zero, the order is approved; If available funds would be negative, the order is denied. The time of trade basic Margin estimation for commodities is pictured below. The basic margin used in this estimation is set by the individual exchanges and recorded on the Futures & FOPs Margin page.

Real-Time Margin Estimations

Throughout the trading day, we apply the following estimations to your securities account in real-time

  • Real-Time Maintenance Margin Estimation
  • Soft-Edge Margining

MEXEM’s Real-Time Maintenance Margin estimation for commodities is shown below. The maintenance margin used in this estimation is set by the individual exchanges and listed on the Futures & FOPs Margin page. In the estimations mentioned below, “Excess Liquidity” refers to excess maintenance margin equity.

Furthermore, any account that has an unfavorable Net Liquidation Value on a trade date or settlement date basis will be liquidated, It should be noted whereas futures settle each night, futures options are usually treated on a premium style basis, which means that they will not settle until the options expire or are sold.

Therefore, for certain futures options positions and combination futures, there may be an imbalance in cash flows which could potentially cause cash to go negative even though Net Liquidation Value is positive. Furthermore, there are a few options where local custom is to cash settle the option each night at the clearing house (e.g. HKFE HSI Options), but we might choose to margin these options on a premium style basis.

SEM:
We will liquidate automatically when an account falls under the minimum margin requirement. However, in order to grant a client the right to maintain risk prior to a liquidation, we estimate Soft Edge Margin (SEM) during a trading day. From the beginning of the trading day until 15 minutes before the end of trading day, Soft Edge Margin permits for an account’s margin loss to be within a defined percentage of the account’s Net Liquidation Value, currently 10%. When SEM ends, the full maintenance need must be met. When SEM is not relevant, the account must meet 100% of maintenance margin.

Soft Edge Margin beginning time of a contract is currently of:
• The market open, or the current open time if recorded on numerous exchanges;
• Or the beginning of liquidation hours, which are situated on trading currency, asset category, product and exchange.

Soft Edge Margin end time of a contract is the earliest of:

  • 15 minutes before market close, or the earliest close time if listed on multiple exchanges;
  • or 15 minutes before the end of liquidation hours.

If an account drops under the minimum maintenance margin, it will not be automatically liquidated until it drops under the Soft Edge Margin. This grants a customer’s account to be in margin violation for a short period of time. Soft Edge Margin is not shown in Trader Workstation.

Once the account drops under SEM however, it is then needed to meet full maintenance margin.
Please note that we reserve the right to shorten soft edge access on any given day, and might get rid of SEM completely in times of heightened instability.

Real-Time Liquidation

Real-time liquidation takes place when your commodity account fails to meet the maintenance margin requirement.

Before we liquidate, we do the following:

  • We pass on excess funds from your equity account to your commodity account so that the need for the maintenance margin is met.
  • To assist you to maintain your margin requirements, we provide color-coded account information to inform you that you are approaching a serious margin deficiency. TWS will highlight the row in the account Window whose value is in a concerning state.

We liquidate customer positions on physical delivery contracts soon before expiration. Physical delivery of the basic commodity (for example, gas futures or oil futures). Liquidation commonly begins three days before first notice day for long positions and three days before first notice day for long positions and three days before last trading day for short positions. Specific contracts have different schedules.

50% Margin Gain

Some futures products are margined at 50% of the usual margin requirements during normal liquid trading hours for each product type.Each day at 15 minutes before the close of the regular trading session for a product, margin requirements will go back to the 100% requirement until the opening of normal trading hours the following day.

Margin requirements will always be implemented at 100% for all spread transactions. For a complete list of products that we margin at 50%, see Futures – Intraday Margin Requirements page under the Futures & FOPs tab above.

Portfolio Margin

Under SEC-approved Portfolio Margin rules and using MEXEM’s real time margin platform, our customers are able in specific cases to enhance their leverage beyond Reg T margin requirements. For decades margin requirements for securities (stocks, options and single stock futures) accounts have been estimated under a Reg T rules-based policy. This estimation approach applies fixed percents to predefined combination procedures.

With portfolio margin, margin requirements are decided using a “risk-based” pricing model that estimates the highest potential loss of all positions in a product class or group across a range of basic prices and instabilities. This model, known as Theoretical Intermarket Margining System (“TIMS”) is implemented each night to U.S. stocks, OCC stock and index options and U.S. single stock futures positions by the ethnic-chartered Options Clearing Corporation (“OCC”) and is circulated by the OCC to engaging in brokerage firms each night. The minimum margin requirement in a portfolio margin is static during the day due to the OCC only circulating the TIMS parameter requirements once a day.

However, Portfolio Margin compliance is updated by us throughout the day based on real-time price of the equity positions in the portfolio Margin account. Please note, at this time , portfolio margin is unavailable for U.S. commodities futures and futures options, U.S. bonds, Mutual Funds, or Forex positions, U.S. regulatory bodies may consider incorporation of these products at a future date.

Portfolio or risk based margin has been deployed for many years in both commodities and many non -U.S. securities markets, with considerable success. Reliant upon the distribution of the trading account, Portfolio Margin may need a lower margin than that needed under Reg T rules, which translates to increased leverage. Trading with increased leverage involves increased risk of loss. There is also the probability that, given the particular portfolio composed of positions considered as having enhanced risk, the requirement under Portfolio Margin may be larger than the requirement under Reg T. Part of the analysis behind the creation of portfolio margin requirements would more precisely reflect the actual risk of the positions in an account.

Therefore, it is likely that, in an increasingly concentrated account, a Portfolio Margin approach may result in enhanced margin requirements than under Reg T. One of the main plans of Portfolio Margin is to consider the lower risk imminent in a balanced portfolio of protected positions. Oppositively, Portfolio Margin must access significantly higher margin for accounts with positions which represent an accumulation on a relatively low number of stocks.

Eligibility of Portfolio Margin

Customers must meet the following eligibility requirements to open a Portfolio Margin account:

  • An existing account must have at least USD 110,000 (or USD equivalent) in Net Liquidation Value to be eligible to upgrade to a Portfolio Margin account (in addition to being approved for uncovered option trading). Existing customers may apply for a Portfolio Margin account on the Account Type page in Account Management at any time and your account will be upgraded upon approval. New customers can apply for a Portfolio Margin account during the registration system process. It should be noted that if your account drops below USD 100,000 you will be restricted from doing any margin-increasing trades. Therefore if you do not intend to maintain at least USD 100,000 in your account, you should not apply for a Portfolio Margin account.
  • New customer accounts requesting Portfolio Margin may take up to 2 business days (under normal business circumstances) to have this capability assigned after initial account approval. It should be noted that if your account is subsequently funded with less than USD 100,000 in Net Liquidation Value (or USD equivalent), you will be restricted from doing any margin-increasing trades until the Net Liquidation Value exceeds USD 100,000. Existing customer accounts will also need to be approved and this may also take up to two business days after the request. Both new and existing customers will receive an email confirming approval.
  • Those institutions who wish to execute some trades away from us and use us as a prime broker will be required to maintain at least USD 1,000,000 (or USD equivalent).
  • Customers in Canada are not eligible for Portfolio Margin accounts due to IDA restrictions. In addition, all Canadian stock, stock options, index options, European stock, and Asian stock positions will be calculated under standard rules-based margin rules so Portfolio Margin will not be available for these products.
  • Non-U.S. Omnibus Broker (Long Position/Short Position) accounts are not eligible for Portfolio Margin accounts
  • Accounts reporting equity below the $100,000 minimum will be subject to a margin surcharge, the effect of which will be to gradually transition the account to margin levels approximating those of the Reg. T methodology as equity continues to decline.

Under Portfolio Margin, trading accounts are divided into three main component groups: Class groups, which are all positions with the same principle; Product groups, which are closely linked classes; and Portfolio groups, which are closely linked products. Examples of classes would involve IBM, SPX, and OEX. A product example would be a Broad Based Index consisting of SPX, OEX, etc. A portfolio could incorporate such products as Broad Based Indices, Growth Indices, Small Cap Indices, and FINRA Indices.
The portfolio margin estimation starts at the lowest level, the class. All positions with the same class are arranged and stressed (underlying price and implied instability are changed) together with the following parameters:

  • A normalized stress of the underlying.
    • For stock, equity options, narrow based indices and single stock futures, the stress guideline is plus or minus 15% with eight other points within that range.
    • For U.S. market small caps and FINRA market indices the stress guideline is plus 10%, minus 10% as well as eight other points in-between.
    • For Broad Based Indices and Growth indices the stress guideline is plus 6%, minus 8% as well as eight other points in-between.
  • A market-based stress of the underlying. A five standard variation historical move is computed for each class. This five standard variation move is based on 30 days of high, low, open and close data from Bloomberg except for weekends and holidays. The class is stressed up by 5 standard variations and down by 5 standard variations.
  • For Broad Based Indices the implied instability factor is increased 75% and decreased 75%
  • For all other classes, the implied instability for each options class is increased 150% and decreased 150%

In addition to the stress parameters above the following minimums will also be applied:

    • Classes with large single accumulations will have a margin requirement of 30% implemented to the accumulated position.
    • A $0.375 multiplied by the index per contract minimum is calculated.
    • The same unique margin requirements for OTCBB, Pink Sheet and low cap stocks that apply under Reg T, will still be implemented under Portfolio Margin.
    • Basic margin will be 110% of Maintenance Margin.

All the above stresses are implemented and the worst case failure is the margin requirement for the class. Then typical connections between classes within a product are implemented as offsets. For example, within the Broad Based Index product 90% offset is authorized between SPX and OEX. Lastly typical connections between products are implemented as offsets. An example would be a 50% offset between Broad Based Indices and Small Cap Indices. For Stocks and Single Stock Futures offsets are only authorized within a class and not the margin requirement for the account. For a complete list of products and offsets, see Appendix -Product Groups and Stress guidelines section at the end of this document.

MEXEM real-time, intraday margining platform allows us to implement the Day Trading Margin Rules to Portfolio Margin accounts based on real-time equity, so Pattern Day Trading Accounts will always be able to trade based on their entire, real-time buying power.

Because of the complication of Portfolio Margin estimations it would be exceedingly complicated to estimate margin requirements manually. We motivate those interested in Portfolio Margin to use MEXEMs TWS Portfolio Margin Demo to comprehend the impact of Portfolio Margin requirements under various scenarios.

U.S Stocks

This page consists of the estimations of margins for a Reg T Margin Accounts. All margin requirements that are mentioned in this page are the minimum requirements.
The following tabulation shows the basic margins for stocks (while submitting the trade), the maintenance margins (while holding the stocks) and end of the day margins.

Long Position:

  • The initial margins are 25% of the value of the securities.
  • Maintenance margins are like the initial margins.
  • The initial margins at the end of the day are 50% of the value of the securities.
  • For cash account – 100% of the value of the securities.

Short Position:

  • The initial margin is 30% of the value of the securities.
  • Maintenance margins:
    • 30% of the value of the securities if the price is higher than $16.67.
    • $5 per stock if the price is higher than 5$ but lower than 16.67$
    • 100% of the value of the securities if the price is lower than $5.
    • $2.50 per stock if the price of the stock price is equal or lower than $2.50.

Unique shares
We may decrease the collateral value of securities (lessens marginability) for a variety of reasons, including:

  • small market capitalization or small issue size
  • low liquidity in the collective primary/secondary exchanges
  • involvement in tenders and other corporate action

Changes in marginability are usually considered for a certain security, in cases of concerns about the viability or liquidity of a company, marginability deductions will be implemented to all securities provided by, or related to, the affected company, including bonds, derivatives, depository receipts, etc.

See the section on Reduced Marginability Calculations on the Margin Calculations page for information concerning large position and position concentration algorithms that might affect the margin rate implemented to a given security within an account and may differ between accounts.