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Why there are still margin calls when margin rate is 100%


Twerkingcat

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2 hours ago, Twerkingcat said:

I don't understand and would use some help. On my spread betting accounts current margin rate is 100% for all tiers. The way I understand it is all positions are cash covered, why there are still margin calls when underying stock goes down?

Hey, 

Thanks for your post. 

Sometimes we have to increase margin if markets become extremely volatile.

Usually it's only by a small amount but due to the market movements we've seen over the past couple of days our risk team and our exposure desk find these higher margins appropriate. 

If the market calms the margin requirement will more than likely decrease meaning you will have more available funds rather than less. (because if we ask for 100% margin then decrease it to 20% margin the 80% will go back into your available funds) please bear in mind that your profit/ losses also change this figure. 

All the best  

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Hi Charlotte,

you may misunderstood my question or maybe I misunderstood your answer :)

I am not asking why margin rate is 100%
. What I am asking is that when I buy at that rate, there is essentially no leverage, whole my position is covered by cash, right?  So in theory my equity should be able to go down to zero without a single margin call, that's because everything is covered already and IG is not exposed.

Yet I received margin call emails and had to topup my account, hence my question.

Thanks.

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22 minutes ago, Kodiak said:

If you are retail 

Then you have also this ESMA 50% close out rule,

Search the forum


Thanks, good to know! I wish I could opt out :)

On a closer look at the end of the day statement, I noticed that order I put before market opened was executed at 20% margin rate, so there was some leverage used, despite UI showing margin rate 100%

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