Balfour Beatty margin

[Guest Oberonrcb]

Can anyone explain why the margin for Taylor wimpey is 5% whilst Balfour Beatty is 15%.

Both companies being in ftse 100 and similar risk?

Rolls Royce has shown extreme volatility recent but its margin remains at 5%?

[Guest SimonC]

Hi 

 

Thanks for your question - a very good one relevant to recent movements.

 

Balfour Beatty (BBY) is FTSE 250 listed as opposed to the FTSE 100 listings of Rolls Royce (RR) & Taylor Wimpey (TW). As a general rule, we do have lower margin rates for FTSE 100 companies than for FTSE 250, as these tend to be larger and more liquid than their FTSE 250 counterparts.

 

Margin rates are decided on a number of factors though, including but not limited to current market volatility. Market Cap & liquidity have a big effect on the margin.

 

RR has a market cap of £12.75 Billion, TW a market cap of £6 Billion and BBY with a smaller value of £2 Billion.

 

To give you an idea of liquidity for these 3 companies: RR has traded a total volume of 1.8 million shares so far today. TW a volume of 2.5 million, with BBY coming in much lower at volume of 95,000 currently.

 

We do take risk and volatility into account, and adjust margin rates from time to time dependent on these factors. If RR or any other company were to become much more volatile than usual over a prolonged period, it is possible that we would raise margin rates at that point as a precaution.

 

I hope this helps explain things. Thanks again for your question.

 

Regards,

 

SimonC