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Margin requirements


gatehill

Question

I currently have two spread bets on individual shares, both with guaranteed stops.

The sum of the current loss on them plus the margin is below my total funds so I am being asked to top up my account  even though the guaranteed stops are well covered by the cash in my account.

I don't understand this - can somebody please explain?

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17 hours ago, gatehill said:

I currently have two spread bets on individual shares, both with guaranteed stops.

The sum of the current loss on them plus the margin is below my total funds so I am being asked to top up my account  even though the guaranteed stops are well covered by the cash in my account.

I don't understand this - can somebody please explain?

Hi, this has come up before and if I remember correctly the reply was that when the new margin regulations from ESMA came out in early 2018 brokers originally thought as you but when they sought clarification from ESMA the regulator ruled that only market stop orders could be used for the margin calculation not a brokers guarantee stop. 

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Thanks for your response, Caseynotes; so what's the difference between "market stop orders" and "brokers' guarantee stops" as far as the average punter like me is concerned? After all, surely my contract is with the broker so if they are offering a guaranteed stop, is that not legally binding?

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16 minutes ago, gatehill said:

Thanks for your response, Caseynotes; so what's the difference between "market stop orders" and "brokers' guarantee stops" as far as the average punter like me is concerned? After all, surely my contract is with the broker so if they are offering a guaranteed stop, is that not legally binding?

a market order sits in the market while a guaranteed stop is a broker guarantee. Any order that sits in the market can be jumped over (slippage). I would think the guaranteed stop is legally binding but couldn't say what would happen if a broker went bust after a black swan event.

That's one of the main reasons I stick with IG, they have a long track record of surviving black swan events, many brokers don't, some very big ones have fallen very suddenly.

Recently someone wrote on the forum how different brokers operate and how the good ones don't take the other side of a punters bet but rather match A book to B book and then hedge the rest. They correctly sited the broker Plus 500 who recently had a major profits drop due to their punters 'getting it right' in the recent oil turmoil. You really don't want to be with a broker like that, doesn't matter how 'cheap' they might seem, ultra low spreads or whatever.  

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8 hours ago, gatehill said:

Thanks, again, for your response. I'm not inclined to add funds (the minimum on line is £250, but I believe you can add less over the phone.

not sure about the phone, I think the min is more to do with using a card. same for withdrawals to a card, but if you have an established link to your bank account there doesn't seem to be a minimum withdrawal amount.

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Via the bank could well be less, but it says it takes up to three days, which I find surprising. Cards and PayPal its £250 minimum, but when this arose some months ago, I'm fairly certain they told me it could be less over the phone. However, as my shortfall is under £20 at present, I shall ignore it and trust the market (and my positions) turn more positive shortly!

I appreciate your input over the last few days. Looking at the some of the rest of the forum, there is a lot to learn, and you have obviously helped a lot of people!

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3 hours ago, gatehill said:

Via the bank could well be less, but it says it takes up to three days, which I find surprising. Cards and PayPal its £250 minimum, but when this arose some months ago, I'm fairly certain they told me it could be less over the phone. However, as my shortfall is under £20 at present, I shall ignore it and trust the market (and my positions) turn more positive shortly!

I appreciate your input over the last few days. Looking at the some of the rest of the forum, there is a lot to learn, and you have obviously helped a lot of people!

I always withdraw to my bank account and though it says up to three days it always seems to be a near instant transaction, I've certainly never noticed any delay. There may be a delay on the first occurrence for security checks or if the transfer is international. 

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