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Future Friedberg Direct Margin Call Procedures
Important
Notice: Margin Call Procedures will become available and automated on
the Trade Station shortly. Notice will be
posted on the site.
There are 3
settings in the “MC” (for Margin Call) column in the
“Accounts” window on the trading platform:
- “N” means
there is sufficient Maintenance Margin
- “W” means
a Maintenance Margin Warning has been issued
- “Y” means
liquidation of positions due to insufficient margin
If the equity in
an account fails to meet the Maintenance Margin Requirement, Friedberg
Direct will issue a Maintenance Margin Warning. A “W” will
show up on the “MC” column in the “Accounts”
window of the trading platform and a “pop-up” message will
appear in the “Messages” window.
1.
No new open positions will be allowed on the account until the
Maintenance Margin Warning or “W” has been reset to
“N” by Friedberg Direct.
2.
If a Maintenance Margin Warning persists, Friedberg Direct
will issue a Maintenance Margin Warning e-mail to the account holder
with details and a deadline for posting the required additional margin,
which is to be determined at the discretion of Friedberg Direct.
3.
The Maintenance Margin Warning status will be reset by
Friedberg Direct if the account equity meets or exceeds the Maintenance
Margin Requirement.
Some or all open
positions will be liquidated if one of the following events occurs:
1.
Where account equity falls to or below Liquidation Margin
Requirement for all open positions, all open positions will be
liquidated immediately, regardless of any previous Maintenance Margin
Warning issued by e-mail, phone, or system messages. At such
time, no notices or additional warnings will be provided by Friedberg
Direct.
2.
Where an account has not been sufficiently funded within the
deadline set in a Maintenance Margin Warning e-mail; some or all
open positions will be closed. At this time, no notices or additional
warnings will be provided by Friedberg Direct.
Friedberg Direct
will not be responsible for losses, lost profits, and other direct or
indirect damages resulting from the closing of open positions due to
insufficient margin.
Margin
Examples for USD Accounts
The Initial Margin
Requirement for opening a position in each currency pair is based on
the Initial Margin Rate applied to the gross principal value of the
contract, expressed in USD.
Once positions are
opened, a minimum amount of equity called Maintenance Margin
Requirement equal to the Initial Margin Requirement must be held in the
account.
The Liquidation
Margin Requirement of an open position in each currency pair is equal
to 10% of the Maintenance Margin Requirement of that currency pair,
expressed in USD.
For currency pairs
where the USD is the primary or secondary currency, the value of the
contract in USD is used to calculate the Initial Margin and Maintenance
Margin required in USD.
For example, a long 100K position in USD/JPY @
120.00:
Initial Margin Rate on USD/JPY = 3%
Value of contract in USD = 100,000
Initial/Maintenance Margin = USD 100,000 X 3% = USD 3,000
Liquidation Margin = USD 3,000 X 10% = USD 300
For example, a long 100K position in GBP/USD @
1.9700:
Initial Margin Rate on GBP/USD = 3%
Value of contract in USD = 197,000
Initial/Maintaining Margin = USD 197,000 X 3% = USD 5,910
Liquidation Margin = USD 5,910 X 10% = USD 591
For currency pairs
where the USD is neither the primary nor secondary currency, the value
of the contract is converted to USD to calculate the Initial Margin and
Maintenance Margin required in USD.
For example, a short 100K position in EUR/CHF @
1.6300:
Initial Margin Rate on EUR/CHF = 6%
Value of contract in EUR = 100,000
Value of contract in CHF = 163,000
Value of contract converted to USD = EUR 100,000 @ 1.3400 EUR/USD = USD
134,000
Initial/Maintenance Margin = USD 134,000 X 6% = USD 8,040
Liquidation Margin = USD 8,040 X 10% = USD 804
Important Note on Funding
Your Friedberg Direct Account
Friedberg Direct
seeks to process funds as quickly as possible because we understand our
customers’ need to apply funds to trading accounts expeditiously,
especially in a fast moving market. Please note, however, that
Friedberg Direct does require at least one full business day to process
funds.
If you are funding
via international transfer, please make note that extra time is needed
by the banks to clear such payments (it may take 3-5 business days and
is wholly out of the control of Friedberg Direct).
Additional
Disclosures
Transactions in
foreign exchange carry a high degree of risk. The amount of Initial
Margin is small relative to the value of the foreign exchange contract
so that transactions are "leveraged" or geared. A relatively
small market movement will have a proportionately larger impact on the
funds you have deposited or will have to deposit; this may work against
you as well as for you. You may sustain a total loss of initial margin
funds and any additional funds deposited with the firm to maintain your
position.
Friedberg Direct Margin Policy and/or the policies of those banks/clearing
houses through which trades are executed may require that additional
funds be provided to properly margin your account and that you are
obligated to immediately meet such margin requirements, including
Initial Margin, Maintenance Margin and Liquidation Margin. It is your
responsibility to monitor your account to ensure that there is
sufficient margin at all times. Once your account equity falls below
Maintenance Margin, Friedberg Direct will issue a Margin Warning via a
pop-up on the trading platform and, if necessary, a follow-up e-mail to
request additional margin. In the event of failure to comply with the
request for funds within the time prescribed, Friedberg Direct in its
sole discretion will close any or all open positions with any resultant
loss for your account. Upon a breach of Liquidation Margin, Friedberg
Direct will attempt, on a best-effort basis, to prevent a debit balance
in your account by liquidating all open positions at prevailing market
rates. However, you may be liable for losses that exceed the amount of
the posted margin. Friedberg Direct will not be responsible for any
losses, lost profits, and other direct or indirect damages resulting
from the closing of positions due to insufficient margin. Friedberg
Direct also reserves the right to refuse to accept any order or
guarantee a market in which to offset.
Friedberg Direct
reserves the right to alter or change the above provisions and
guidelines, which include the Initial Margin, Maintenance Margin,
Liquidation Margin, and the FX margin policy and procedures. For
any changes made to the provisions and guidelines, Friedberg Direct
will post a notice on the website www.friedbergdirect.ca or through
e-mail notification.
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