What is a Margin Call?
A margin call occurs when your margin percentage falls below 140%. You will have 2 days to top-up the account by depositing cash or securities or by liquidating some of your securities. If you fail to top-up by the second day, we will liquidate some counters to raise the margin percentage. When the margin percentage falls below 130%, SGX requires the company to liquidate your margin securities immediately to bring the margin percentage to at least 140%. The company reserves the right to do so without prior notice.
A Margin call is the liquidation of one’s positions due to an inability to meet margin requirements. When one’s account balance is no longer able to cover one’s minimum margin requirement one’s positions are closed automatically. Due to the fact that margin requirements are so low the Trader will not receive a margin call warning, but will instead be closed out automatically. Due to this policy, no client has ever lost more money than they had in their account, though it is theoretically possible. Were the market to gap at the same time your positions were being closed due to margin you could theoretically get a closing price much lower than the price you would receive under normal market conditions. Most trading platforms require a minimum margin requirement of between $2000 and $5000. This once again depends on the company you trade through.
A margin call is a demand by your broker for you to deposit cash or fully marginable securities with your broker. If the value of your collateral falls below the broker’s minimum requirement (usually about 30% of the loan), you will receive a margin call by letter, telephone, telegram, or other means, to request additional collateral in the form of cash or fully marginable securities to meet the requirement. However, only a percentage of a security’s market value can be used to meet your margin call. If you fail to meet the margin call, your broker is authorized (remember the margin agreement form) to sell the margined securities and any other collateral needed to repay the loan plus interest and commissions. You are responsible for any deficit that may remain after your assets are sold.
Stock brokerage firms permit their credit-worthy investors to engage in “margin” trading. In a very real sense margin trading is similar to using your credit card to gamble at a Las Vegas casino. Simply put, margin trading amounts to investing with borrowed money, pledging your portfolio as security for the loans. If the market takes a downward turn and the value of your portfolio dips, you will receive a “margin call” for additional collateral to secure the obligation. If you do not have the resources to put up additional collateral, your portfolio will be sold, piece by piece, until the collateral shortfall is eliminated. There is nothing wrong with margin trading and it has earned vast fortunes for some, but it is not for the faint-hearted, and it is certainly not for anyone whose financial resources are less than ample. Stockbrokers have a professional responsibility, before opening a margin account for you, to make certain that you fully comprehend the nature and extent of the ris
When you take out Westpac BlueChip20 account, a loan account with BT Margin Lending is established. Your obligation to repay this loan (including interest and fees) is secured over your Westpac BlueChip20 account. However, your obligation to repay the principal and pay interest is not limited to the value in your Account. So, if the value in your Account is less than the amount required to meet payments to BT Margin Lending, then you will have to use your other funds to make the payments. Also, if at any time the sum of the principal and interest on the loan exceeds the amount that the lender has allowed as the value at that time of your Westpac BlueChip20 Portfolio (which is referred to as Loan Limit) a margin call is made and the amount of the loan must be reduced. The Loan Limit of your Portfolio will not be the total market value of the Shares held for you; the Loan Limit of your Portfolio will generally only be between 40% and 70% of the market value of the shares that make up tha
