New margin requirements for Oil

[cate]

Hi all,

IG sent an email yesterday about the new margin requirements for trading oil. Existing positions will have the new charge applied this afternoon, and it will be "the larger of 80 points multiplied by your trade size or 5% of the notional value of your trade, based on the opening level". I trade the CFD 1 euro contract, at the minimum size which is .25 of the full contract. Does anyone know how to apply the new formula? For example what is the "trade size" and what is the "notional value"?

What makes it more confusing for me is that the email said that new positions would already be subject to the new charge, but I don't notice any change, although looking at the "information" for the contract it shows margin required as 80%. But the dealing ticket gives the margin on a .25 contract as about 44 euros, which doesn't look like 80%. Just anxious to understand what changes are going to come in, since I have several positions open and don't want to be hit by an 80% (of several thousand pounds?) charge at 4pm when the change comes in!

Perhaps I should tag @CharlotteIG on this.

Hope everybody is keeping safe!

Cate

[Caseynotes]

15 minutes ago, cate said:

Hi all,

IG sent an email yesterday about the new margin requirements for trading oil. Existing positions will have the new charge applied this afternoon, and it will be "the larger of 80 points multiplied by your trade size or 5% of the notional value of your trade, based on the opening level". I trade the CFD 1 euro contract, at the minimum size which is .25 of the full contract. Does anyone know how to apply the new formula? For example what is the "trade size" and what is the "notional value"?

What makes it more confusing for me is that the email said that new positions would already be subject to the new charge, but I don't notice any change, although looking at the "information" for the contract it shows margin required as 80%. But the dealing ticket gives the margin on a .25 contract as about 44 euros, which doesn't look like 80%. Just anxious to understand what changes are going to come in, since I have several positions open and don't want to be hit by an 80% (of several thousand pounds?) charge at 4pm when the change comes in!

Perhaps I should tag @CharlotteIG on this.

Hope everybody is keeping safe!

Cate

Hi, I answered a question on this yesterday but haven't seen the email but I took it to be referring to professional clients who normally have a margin requirement of just 1.3% that will be raised to 5% due to increased volatility while retail clients who already have a margin requirement of 10% won't be affected?

[cate]

Thanks for the reply, @Caseynotes. I can see that would make sense, but it's odd because there was nothing in the email to suggest it was intended for professional clients (and I'm not one). And then there's the "information" on the contract which now shows 80% not the 10% it used to, even though (at present?) that isn't being used to calculate the margin on the deal ticket.

 

[cate]

Oh, and incidentally that 80% margin is for tier 1 - it goes up to 480% on tier 4! Needless to say I'm never going to have to worry about anything beyond tier 1, but still a potential jump from 10% to 80% at 4pm is worrying. @CharlotteIG, is that really what will happen?

 

[Caseynotes]

16 minutes ago, cate said:

Oh, and incidentally that 80% margin is for tier 1 - it goes up to 480% on tier 4! Needless to say I'm never going to have to worry about anything beyond tier 1, but still a potential jump from 10% to 80% at 4pm is worrying. @CharlotteIG, is that really what will happen?

 

yes the deal ticket doesn't add up.

[Guest Muneeb Younsi]

On 24/04/2020 at 12:58, cate said:

Hi all,

IG sent an email yesterday about the new margin requirements for trading oil. Existing positions will have the new charge applied this afternoon, and it will be "the larger of 80 points multiplied by your trade size or 5% of the notional value of your trade, based on the opening level". I trade the CFD 1 euro contract, at the minimum size which is .25 of the full contract. Does anyone know how to apply the new formula? For example what is the "trade size" and what is the "notional value"?

What makes it more confusing for me is that the email said that new positions would already be subject to the new charge, but I don't notice any change, although looking at the "information" for the contract it shows margin required as 80%. But the dealing ticket gives the margin on a .25 contract as about 44 euros, which doesn't look like 80%. Just anxious to understand what changes are going to come in, since I have several positions open and don't want to be hit by an 80% (of several thousand pounds?) charge at 4pm when the change comes in!

Perhaps I should tag @CharlotteIG on this.

Hope everybody is keeping safe!

Cate

I see the same issue. Opened then position @1585 with size 30 and now the margin is coming as 15000 instead of 4755. Why is that?

[MuneebYounsi]

@CharlotteIG could you please explain why for Tier 1 retail client your margin % has up from 10 to 80.

e.g. position @1585 size 30 asking me for 15000 instead of 4755.