Margin-related calculations

The examples below illustrate the margin calculations, including the potential impact around MarginClosedThe required collateral to open and maintain a leveraged position. Close-Out.

In these hypothetical examples, we assume the prices and the margin rates (sample values that may not reflect the current prices or rates).

Let’s assume that you have a sub-account with a balance of GBP 50,000.

You buy 1 million EUR/GBP. When you place the order, the EUR/GBP market price is 0.8566 / 0.8568, so you buy EUR/GBP at 0.8568.

 

BidClosedThe prevailing buy price.

Mid

AskClosedThe prevailing sell price.

EUR/GBP

0.8566

0.8567

0.8568

Balance

50,000.00

Margin_Used

28,559.97

UPL

-200.00

NAV

49,800.00

Margin_Available

21,240.03

Margin_%

28.67%

Margin_Used = Margin_Rate * TradeClosedThe actual execution of buying or selling an asset, resulting in a completed transaction._Quantity * Instrument_To_Home_Ccy Conversion current sided-rate = 3.33333% x 1,000,000 x 0.8568 = 28,559.97 GBP

The position is revalued against the bid-price of EUR/GBP, so the position has:

UPL = Trade_Quantity x (Current bid – Trade price) = 1,000,000 x (0.8566 – 0.8568) = -200 GBP

NAV = Balance + UPL = 50,000 – 200 = 49,800 GBP

Margin_Available = NAV – Margin_Used = 49,800 – 28,559.97 = 21,240.03 GBP

Margin_% = (0.5 x Margin_Used) / NAV = (0.5 x 28,559.97) / 49,800 = 28.67%

The displayed “Margin_%” is a “Margin Close-Out Percentage” that ranges from 0 up to 100%, at which point a Margin Close-Out event is triggered.

 

Bid

Mid

Ask

EUR/GBP

0.8536

0.8537

0.8538

EUR/GBP has dropped in price by 30 pips.

Balance

50,000.00

Margin_Used

28,459.97

UPL

-3,200.00

NAV

46,800.00

Margin_Available

18,340.03

Margin_%

30.41%

Margin_Used = Margin_Rate * Trade_Quantity * Instrument_To_Home_Ccy Conversion current sided-rate = 3.33333% x 1,000,000 x 0.8538 = 28,459.97 GBP

The position is revalued against the bid-price of EUR/GBP, so the position has:

UPL = Trade_Quantity x (Current bid– Trade price) = 1,000,000 x (0.8536 – 0.8568) = -3,200 GBP

NAV = Balance + UPL = 50,000 – 3,200 = 46,800 GBP

Margin_Available = NAV – Margin_Used = 46,800 – 28,459.97 = 18,340.03 GBP

Margin_% = (0.5 x Margin_Used) / NAV = (0.5 x 28,459.97) / 46,800 = 30.41%

 

Bid

Mid

Ask

EUR/GBP

0.82037

0.82047

0.82057

EUR/GBP has dropped in price by some 360+ pips.

Balance

50,000.00

Margin_Used

 27,352.31

UPL

 -36,430.00

NAV

 13,570.00

Margin_Available

 -13,782.31

Margin_%

100.78%

Margin_Used = Margin_Rate * Trade_Quantity * Instrument_To_Home_Ccy Conversion current sided-rate = 3.33333% x 1,000,000 x 0.82057 = 27,352.31 GBP

The position is revalued against the bid-price of EUR/GBP, so the position has:

UPL = Trade_Quantity x (Current bid – Trade price) = 1,000,000 x (0.82037 – 0.8568) = -36,430 GBP

NAV = Balance + UPL = 50,000 – 36,430 = 13,570 GBP

Margin_Available = NAV – Margin_Used = 13,570.00 – 27,352.31 = -13,782.31 GBP

Margin_% = (0.5 x Margin_Used) / NAV = (0.5 x 27,352.31) / 13,570 = 100.78%

Let’s assume that you have a sub-account with a balance of GBP 50,000.

You buy 1 million EUR/USD when the market price is 1.0780 / 1.0782, so you buy EUR/USD at 1.0782.

 

Bid

Mid

Ask

EUR/USD

1.0780

1.0781

1.0782

GBP/USD

1.2590

1.2591

1.2592

EUR/GBP

0.8561

0.85625

0.8564

Balance

50,000.00

Margin_Used

28,546.64

UPL

-158.86

NAV

49,841.14

Margin_Available

21,294.50

Margin_%

28.64%

Margin_Used = Margin_Rate * Trade_Quantity * Instrument_To_Home_Ccy Conversion current sided-rate = 3.33333% x 1,000,000 x 0.8564 = 28,546.64 GBP

The position is revalued against the bid-price of EUR/USD, so the position has:

UPL = Trade_Quantity x (Current bid – Trade price) x Quote_To_Home_Ccy Conversion current sided-rate = 1,000,000 x (1.0780 – 1.0782) x (1/1.2590 ) = -158.86 GBP

NAV = Balance + UPL = 50,000 – 158.86 = 49,841.14 GBP

Margin_Available = NAV – Margin_Used = 49,841.14 – 28,546.64 = 21,294.50 GBP

Margin_% = (0.5 x Margin_Used) / NAV = (0.5 x 28,546.64) / 49,841.14 = 28.64%

 

Bid

Mid

Ask

EUR/USD

1.0720

1.0721

1.0722

GBP/USD

1.2470

1.2471

1.2472

EUR/GBP

0.8595

0.85965

0.8598

EUR/USD has dropped in price by 60 pips while GBP/USD has decreased by 120 pips, with EUR/GBP moving accordingly.

Balance

50,000.00

Margin_Used

28,659.97

UPL

-4,971.93

NAV

45,028.07

Margin_Available

16,368.10

Margin_%

31.82%

Margin_Used = Margin_Rate * Trade_Quantity * Instrument_To_Home_Ccy Conversion current sided-rate = 3.33333% x 1,000,000 x 0.8598 = 28,659.97 GBP

The position is revalued against the bid-price of EUR/USD, so the position has:

UPL = Trade_Quantity x (Current bid – Trade price) x Quote_To_Home_Ccy Conversion current sided-rate = 1,000,000 x (1.0720 – 1.0782) x (1/1.2470) = -4,971.93 GBP

NAV = Balance + UPL = 50,000 – 4,971.93 = 45,028.07 GBP

Margin_Available = NAV – Margin_Used = 45,028.07 – 28,659.97 = 16,368.10 GBP

Margin_% = (0.5 x Margin_Used) / NAV = (0.5 x 28,659.97) / 45,028.07 = 31.82%

 

Bid

Mid

Ask

EUR/USD

1.03369

1.03379

1.03389

GBP/USD

1.2320

1.2321

1.2322

EUR/GBP

0.8389

0.83905

0.8392

EUR/USD has dropped in price by 440+ pips while GBP/USD has decreased by 270 pips, with EUR/GBP moving accordingly.

Balance

50,000.00

Margin_Used

27,973.31

UPL

-36,128.25

NAV

13,871.75

Margin_Available

-14,101.56

Margin_%

100.83%

Margin_Used = Margin_Rate * Trade_Quantity * Instrument_To_Home_Ccy Conversion current sided-rate = 3.33333% x 1,000,000 x 0.8392 = 27,973.31 GBP

The position is revalued against the bid-price of EUR/USD, so the position has:

UPL = Trade_Quantity x (Current bid – Trade price) x Quote_To_Home_Ccy Conversion current sided-rate = 1,000,000 x (1.03369 – 1.0782) x (1/1.2320) = -36,128.25 GBP

NAV = Balance + UPL = 50,000 – 36,128.25 = 13,871.75 GBP

Margin_Available = NAV – Margin_Used = 13,871.75 – 27,973.31 = -14,101.56

Margin_% = (0.5 x Margin_Used) / NAV = (0.5 x 27,973.31) / 13,871.75 = 100.83%

  1. In the v20 sub-account, the amount of margin needed (Margin_Used) is dynamic since it increases or decreases as the conversion rate changes.

  2. A Margin Close-Out event (MCO) is initiated/triggered when the Margin Close-Out Percentage increases to 100% or higher.

  3. A Margin Close-Out event is also triggered when the account becomes under-margined, meaning that the close-out percentage is at or above 50%, for 2 consecutive trading days.

  4. A Margin Close-Out event results in a FULL liquidation of all open positions and cancellation of any contingent orders on those positions. Orders not linked/related to the liquidated trades remain active.

If a market in an underlying Instrument is closed or halted, those open trades will be skipped during the MCO process since they cannot be liquidated at the time.