Investment involves risks. The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely that losses will be incurred rather than profit made as a result of buying and selling securities.
Securities Margin Trading involves significant risk and losses may exceed the value of your collateral.
1) What is securities margin trading?
Clients can collateralize holding stocks for additional buying power, and the stock grading ratio is depended on your securities. With margin trading, you only need to pay for a portion of total cost when you buy securities. The portion of total cost that you deposit is initial margin. As you have borrowed money from company to buy securities, the securities would be treated as collateral for the Margin Financing.
2) What should I consider before engaging in securities margin trading?
Before engaging in securities margin trading, customers should understand the features and risks of securities margin trading and assess whether securities margin trading is suitable for them in light of their investment experience, investment objective, financial resources, risk tolerance level, and all other relevant circumstances. Customers should avoid excessive investment in any single stock so as to prevent undue concentration risk. If customers are in doubt or do not fully understand a securities margin trading, they should obtain advice from Account Manager before making the investment decision.
3) Under what circumstances will I receive a margin call?
Margin call is issued once the total collateral in the margin account falls below the outstanding balance.
Suppose if a client own a board lot of PING AN (approx. market value $60,000) and your account show a debit balance of $30,000. Under this situation, you will not receive any margin call since the margin ratio of PING AN is 50%. However, if the price of PING AN falls and its market value becomes $40,000, you will receive our margin call for $10,000 which is needed to settle the differences.
4) When should I fulfill the margin call requirement?
Customer must fulfill the margin level within the specific time after receiving our margin calls (usually one trading day, if market situation very fluctuate, grace period may be very short) either by cash deposit, margin financing accepted collateral or sell out stocks in the account. If customer fails to fulfill the margin call requirement, we reserve the rights to rectify the account position by liquidation the account without any prior notice.
5) What will happen if I do not deposit additional cash or collateral after margin call?
If you do not deposit additional cash or collateral within the requested period, then we have right to liquidate your collateral to cover the margin deficit without further notice.
6) What is the interest rate for margin account?
Annualized percentage rate of standard margin loan is Prime rate+ 5%. This rate is for your reference only, it would be adjusted base on your personal credit standard. (including adjusted higher or lower)