Type of quota
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Line of credit (Credit Limit) |
The system gives users the maximum amount of financing that can be raised according to the asset assessment of the financing account |
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Financing amount (Finance Amount) |
Within the credit limit, the customer can set the maximum available financing amount of the account |
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Transaction Limit (Trading Limit) |
Grant the customer a transaction amount limit, and the user’s purchasing power will be increased on the original basis. It is also possible to trade without any assets, and this amount can also be granted to cash or financing accounts |
The type of margin
It can be divided into Initial Margin (IM), Maintenance Margin (MM), and Closing Margin (FM)
- Initial Margin (IM): The margin requirement to be deposited when opening a position
The margin required to open a position in the account is calculated according to a certain percentage of the market value of the stocks and derivatives held. When the equity assets (cash, securities market capitalization) of the account are less than the initial margin, it means that the purchasing power is exhausted and no new positions can be opened.
- Maintenance Margin (MM): The level at which equity assets need to be maintained
The minimum margin requirement to maintain the current position is calculated as a percentage of the market value of the stock and derivatives held. When the equity assets (the sum of cash and securities market value) of the account are less than the maintenance margin, the margin call will be triggered.
- Closing Margin (FM): When the equity asset falls below this level, the position may be liquidated immediately
When the user does not deposit or close the position as soon as possible after triggering the margin call , and the equity assets continue to fall, the trader has the right to close the position at any time when the equity assets (the sum of the market value of cash and securities) in the account are lower than the liquidation margin.
- IM/MM/FM requirement = sum (market value of individual investment products x corresponding margin factor).
Margin calculation formula
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Initial Margin (Initial Margin) |
Total Market Value of Stock Positions * Initial Margin Ratio |
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Maintenance Margin (Maintenance Margin) |
Total Market Value of Stock Positions * Maintenance Margin Ratio |
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Liquidation Margin (Forced Margin) |
Total market value of stock holdings * liquidation margin ratio |
*Frozen shares are not counted
Purchasing power calculation formula
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Maximum purchasing power (Max Buying Power) |
Total book amount – Pending settlement freeze – Settled freeze + Total market value of positions – Total initial margin + trading quota |
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Total assets |
The total market value of the position + the total book amount |
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Available Financing Amount |
Available cash + maximum financing amount |
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Available purchasing power |
The amount of available financing and the maximum purchasing power are less |
*The maximum purchasing power cannot exceed the financing amount
Margin Call
The Margin will be slightly higher than the difference between the Maintenance Margin and the Equity Assets, but lower than the Initial Margin and the Equity Assets.
When the equity equity is below the maintained level, the company will issue a margin call. The client must settle the margin call within 3 trading days from the date of receipt of the notice, including the date of receipt of the notice.
Example: Margin call case
Client deposits $10,000 Cash and $5,000 value The A Stocks (IM：30%, MM：25%) and purchased a $25,000 purchase of B Stocks (IM：50%, MM：45%）。 Hypothesis B The market capitalization of the stock fell to $19,500。 After the customer buys the stock, B After the market value of the stock falls, the client’s position is lower
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Cash balance |
HKD 15,000 |
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Initial Margin for Positions |
HKD 11,250 (HKD 5,000 X 30% + HKD 19,500 X 50%) |
|
Position Maintenance Margin |
HKD 10,025 (HKD 5,000 X 25% + HKD 19,500 X 45%) |
|
Equity assets |
HKD 9,500 |
|
Margin call |
HKD 1,015 (Initial Margin and Equity Equity Equity Difference is HKD1,750) |
Clients are required to bring the equity equity in their account into margin requirements on or before the specified date.
If the client chooses to sell the securities, the market value to be sold will not exceed the difference between the initial margin and the equity asset/IM Ratio
When the equity assets are lower than the liquidation margin, the margin call must be paid immediately, otherwise the position may be liquidated immediately.