Change in margin requirement

[cate]

Hi,

Last time I traded EUR/TRY about a week ago, the margin required for one mini contract was about £660 but tonight I see it is £1.286. The contract size hasn't changed, so I'm assuming it must be the margin rate that has gone up. It's 15% now, but unfortunately I didn't notice what it used to be - I'm assuming it must have been about half that. Can I just check what would have happened if I'd left a limit order to trade EUR/TRY? I'm worried that I might have opened the order thinking I only needed £660 margin, and then suddenly it would have taken the new higher amount and I might not have had enough free margin in my account and ended up with a margin call. Is that what would have happened, or would the system have automatically cancelled my order when the margin requirement changed?

Thanks very much,

Cate

[WarickLewis]

I came to ask a similar question. I hope you get an answer

[cate]

Hi @WarickLewis,

Maybe we should try tagging someone at IG like @KoketsoIG . Fingers crossed we get an answer!

Cate

[TheGuru12]

EUR/TRY would be an exotic pair and quite volatile at times so I imagine there's a higher margin requirement for erratic levels of liquidity. 

[cate]

1 hour ago, cate said:

Maybe we should try tagging someone at IG like @KoketsoIG .

 

It doesn't seem to have recognised @KoketsoIG as a valid username. So I'm trying it again and also tagging @JamesIG. Strange, this time it seems happy with the name. 

Thanks, Cate

[cate]

2 minutes ago, TheGuru12 said:

EUR/TRY would be an exotic pair and quite volatile at times so I imagine there's a higher margin requirement for erratic levels of liquidity. 

Hi @TheGuru12,

Thanks for your comment. I think of EUR/MXN as fairly exotic too, and that's had a constant margin requirement for as long as I've traded it (a couple of years). Up to a few days ago they both had about the same requirement, which was already higher than more mainstream pairs like EUR/USD, and then suddenly without warning EUR/TRY jumped. Generally low liquidity just results in the spread blowing out - EUR/TRY jumps from about 120 pip spread to 700 or 800 in the approach to 10pm roll, but that's not unexpected. 

If it's true that some currencies are liable to go from about 5% to 15% without warning it's a bit alarming, and it would be good to hear from IG which currencies that might apply to. What I'm worried about is what happens to open positions and to orders when the margin changes? 

Cate

[KoketsoIG]

On 25/03/2024 at 23:07, cate said:

Hi,

Last time I traded EUR/TRY about a week ago, the margin required for one mini contract was about £660 but tonight I see it is £1.286. The contract size hasn't changed, so I'm assuming it must be the margin rate that has gone up. It's 15% now, but unfortunately I didn't notice what it used to be - I'm assuming it must have been about half that. Can I just check what would have happened if I'd left a limit order to trade EUR/TRY? I'm worried that I might have opened the order thinking I only needed £660 margin, and then suddenly it would have taken the new higher amount and I might not have had enough free margin in my account and ended up with a margin call. Is that what would have happened, or would the system have automatically cancelled my order when the margin requirement changed?

Thanks very much,

Cate

Hi @cate,

Please note that the margin requirement has not been changed, it has always been higher at 15% compared to the rest of the pairs. As @TheGuru12 mentioned, the pair has a higher margin as it is volatile and not as liquid as major pairs.

Thanks,

KoketsoIG

[cate]

3 hours ago, KoketsoIG said:

Hi @cate,

Please note that the margin requirement has not been changed, it has always been higher at 15% compared to the rest of the pairs. As @TheGuru12 mentioned, the pair has a higher margin as it is volatile and not as liquid as major pairs.

Thanks,

KoketsoIG

Hi @KoketsoIG,

Now I'm really puzzled! If the margin rate hasn't changed the only other reason for the margin required to have doubled would be if the old deal tickets used to be for a 0.5 contract. But I've just checked my transaction history, and the last position I closed in the EUR/TRY (a week ago) shows as -1, so a full mini contract. But the margin requirement was quite definitely six hundred and something pounds, half what the deal tickets are showing now.

I've also just investigated the TRY/JPY where I currently have three positions open. It shows as requiring a 15% margin too, like EUR/TRY, and when I open a deal ticket I discover that again the margin required is about double what it was when I opened the positions a couple of weeks ago. Because the notional is TRY10,000 for these contracts, each one is tiny, so I wouldn't have noticed a big change in my capital "available to deal" if the margin on each one had doubled, so unless there's some way of seeing how much margin each position is currently using I can't check whether that has doubled from when I opened them. (Is there some way of doing that?) But the margin required on the deal tickets has definitely changed in exactly the same way as the EUR/TRY .

If the margin rate hasn't changed in the last week, can you explain what's happened? The only other possible explanation is that previously the system was calculating the 15% margin incorrectly and now someone has noticed and corrected the code, but that seems unlikely. Can the tech team see into my past trades and be able to work out what happened? The reference for my last EUR/TRY trade was PP4VTGAY if that helps them to identify it. 

I understand that the TRY is an "exotic" currency, and I'm not questioning why the rate should be set at 15%, I'm just worried about what the sudden change means about an instability in the system, and a hidden risk that I'm not aware of.

Thanks,

Cate

[neueneuen]

5 hours ago, KoketsoIG said:

Hi @cate,

Please note that the margin requirement has not been changed, it has always been higher at 15% compared to the rest of the pairs. As @TheGuru12 mentioned, the pair has a higher margin as it is volatile and not as liquid as major pairs.

Thanks,

KoketsoIG

Hi @KoketsoIG,

I hope you are well.

Tier 1 margin requirement for at least USD/TRY, GBP/TRY, and EUR/TRY was 7.5% at least between February 28 and March 22 this year.

Could you kindly investigate further, please?

WBR

Edited March 27 by neueneuen

[neueneuen]

@cate, if you find an email with the subject "Your IG Statement - DD MMM YYYY" daily sent to you when you have open positions or trades, there, in the "FINANCIAL CURRENT OPEN POSITIONS" table you would be able to compare "Notional Value" to "Deposit Required" and confirm that Tier 1 margin requirement was 7.5% up until the end of last week at the very least.

Edited March 27 by neueneuen

[cate]

1 hour ago, neueneuen said:

@cate, if you find an email with the subject "Your IG Statement - DD MMM YYYY" daily sent to you when you have open positions or trades, there, in the "FINANCIAL CURRENT OPEN POSITIONS" table you would be able to compare "Notional Value" to "Deposit Required" and confirm that Tier 1 margin requirement was 7.5% up until the end of last week at the very least.

Hi @neueneuen,

I'm so grateful for you commenting on this thread! And for the advice on where to find a record of what the margin percentage used to be. 

So looking at my statement of the 20th March, I held a position in EUR/TRY and the notional value (in TRY) was 344,731.70 and the deposit required was 26,558.20 which means the margin was 7.5% of the notional, which explains why the margin requirement has now doubled. @KoketsoIG could you investigate this? There was no warning from IG that there was going to be a change to the margin requirement, and so I'm still worried about what would have happened to open positions when that change came in. Normally, when we're notified in advance that there's going to be a change, the requirement on open positions increases which is fine if we know that's coming and can make sure we have enough margin available. 

Thanks again, @neueneuen!

Cate

 

[KoketsoIG]

14 hours ago, cate said:

Hi @neueneuen,

I'm so grateful for you commenting on this thread! And for the advice on where to find a record of what the margin percentage used to be. 

So looking at my statement of the 20th March, I held a position in EUR/TRY and the notional value (in TRY) was 344,731.70 and the deposit required was 26,558.20 which means the margin was 7.5% of the notional, which explains why the margin requirement has now doubled. @KoketsoIG could you investigate this? There was no warning from IG that there was going to be a change to the margin requirement, and so I'm still worried about what would have happened to open positions when that change came in. Normally, when we're notified in advance that there's going to be a change, the requirement on open positions increases which is fine if we know that's coming and can make sure we have enough margin available. 

Thanks again, @neueneuen!

Cate

 

Hi @cate and @neueneuen,

Apologies for any inconvenience caused. Please note that the base margins on all TRY pairs were increased due to Turkish local elections. This increase is for new positions only. They will revert to 7.5% next week. Again, apologies for any inconvenience and confusion. I hope this clears up any confusion.

All the best,

KoketsoIG

[cate]

Thanks very much, @KoketsoIG. That's much better than I thought it might be. 

Best wishes,

Cate

[AhmedMarsh]

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