(maintenance margin) is the minimum amount of equity capital required to keep an investor's account open. Many investors buy and sell assets on margin(that is, part of the cost is paid by the broker), because this method of trading increases purchasing power. However, trading on margin also involves significant risk. The margin requirement is intended to minimize the risk of loss both on the part of the investor himself and on the part of the brokerage company.

Initial Margin: How Much?

When speculators trade on margin, they pay only a fraction of the asset's value with their own capital—they borrow from a broker to pay for the rest. Typically, speculators must ensure that they have a minimum margin in their account before they begin trading. For the first purchase it is set initial margin (initial margin) , which is 50% of the total amount in the account. That is, an investor should plan trading in such a way that he will spend on buying securities he will only be able to make half of the invested funds. This size ( 50%) installed by the so-called rule T, issued by the Federal Reserve Board of Governors, and is considered the minimum (brokers may require more at their discretion). The exception is futures trading - for derivative contracts, the initial margin is at the discretion of the brokers themselves. If the amount of funds in the account is below the initial margin level, the purchase and sale of assets becomes unavailable to the investor.

What happens if there is a lack of funds?

Government regulators typically set the guarantee margin at 25%, however, brokers may prefer a higher value. When the value of the portfolio falls and the amount in the account approaches the guarantee margin level, the so-called margin call– a notification from the broker that you need to top up your account. If it is not possible to contact the investor, the broker closes part of the investor’s positions independently by opening transactions directed in the opposite direction. Investors themselves can close some positions - this is an alternative solution compared to replenishing the account with new funds.

The principle of margin lending is that the Client can make transactions not only within own funds, but also using borrowed funds provided by the broker. Borrowed funds are provided to secure positions in assets, belonging to the Client(cash and/or securities that meet liquidity criteria). In this case, the Client’s assets are not blocked and it is possible to carry out transactions.

The amount of “leverage” - that is, the amount that you can use to borrow against the security of your securities - is calculated for each security.

The general principle of margin lending is that the value of the client's securities portfolio must be greater than the initial and minimum margin.

Initial margin is an amount in rubles, which is obtained by multiplying the cost of each liquid security in the client’s portfolio by the initial risk rate for this security and then adding the resulting results.

The minimum margin is an amount in rubles, which is obtained by multiplying the cost of each liquid security in the client’s portfolio by the minimum risk rate for this security and then adding the resulting results.

If the value of the portfolio has decreased below the initial margin, then the client can no longer open new loan positions. If the portfolio value has dropped below the minimum margin, then the client’s positions are closed by the broker (margin call).

When a client places an order to buy or sell securities, the trading system will calculate the initial and minimum level margin. If the portfolio value rules are not met, the application will not be submitted.

It must be remembered that margin trading is associated with increased risk. A client who trades with leverage is required to monitor the margin level and take measures to close part of the positions before a margin call occurs.

Detailed conditions for making Margin and Unsecured transactions (Part 9, 10 of the Regulations).

Formula for calculating initial and minimum margin

Initial margin = ∑ (Number of liquid securities * Last trade price * Initial risk rate.)

Minimum margin = ∑(Number of liquid securities * Last trade price * Minimum risk rate.)

Initial and minimum bid risk is determined for each liquid security based on the basic risk rates of the National Clearing Center and the formulas given in the Directive of the Bank of Russia dated April 18, 2014 No. 3234-U.

The broker has the right to set his own increased rates risk

Formula for calculating portfolio value

Portfolio value = Assets under the securities + Assets under the DS – Liabilities under the securities – Liabilities under the DS.

In this case, all unsettled transactions are taken into account. Only marketable securities are taken into account in the portfolio value.

Situation 1:

Portfolio Value > Initial Margin

This means that the client can open margin positions.

Situation 2:

Initial Margin > Portfolio Value > Minimum Margin

This means that the client can no longer open new margin positions; he needs to monitor market movements and close some positions in a timely manner to avoid a margin call.

Situation 3:

Minimum Margin > Portfolio Value

This means that the broker is forced to forcibly close part of the client’s positions (margin call).

Example:

Initial margin = ∑(security value * Initial risk rate for securities)

That is, as long as the portfolio value is above 299,975.6 rubles, the client can open margin positions. As soon as the value of the portfolio has decreased below 299,975.6 rubles, it is necessary to monitor further dynamics and the minimum margin.

Minimum margin = ∑(cost of securities * Min. risk rate for securities)

In this case, 165,212.7 is a critical amount. If the portfolio falls below this amount, some positions will be forcibly closed by the broker (margin call).

What is margin?This term is used quite often in economics, commerce, and trading, but in each case it means slightly different things. Therefore, to avoid confusion and misunderstandings, this article covers all the meanings of the termmargin.

From this article you will learn what it is:

• business margin;
• margin in trading;
• margin trading;

Margin in business

Margin in business is the difference between the price and cost of a product. Margin and markup are sometimes confused. Let's explain the difference using the formulas:

Margin=(sale price-cost price)/sale price*100%

Extra charge=(sales price-cost)/cost*100%

The markup can easily be more than 100%, but the margin cannot be more than 100%, because in a profitable business the cost less price sales.

Let's look at an example:

Margin and markup are interrelated; an increase in markup leads to an increase in margin. Knowing the margin, you can calculate what the markup should be and regulate the selling prices of the goods.

For example, an enterprise wants to get a 30% margin when the cost of goods is 25 rubles. Then the calculations to determine the markup will look like this:

30%=(X-25)/X*100%
0.3X=X-25
25=0.7X

Selling price = 35 rub.
Markup = 10 rub. or 40%

Margin is also called return on sales and can be used to estimate sales growth. If the cost and markup do not change, then only an increase in the number of items sold leads to an increase in the margin.

Margin in trading

Margin in trading is the difference between the sale and purchase prices of securities,, spreads, .

When trading futures, the trader's account is adjusted daily by the amount of variation margin. If the trader makes a profit, then the variation margin is credited to the trading account. If a trader suffers a loss, the variation margin is debited from the trading account. Accrual/write-off occurs during clearing. Clearing (or clearing session) usually occurs once or twice a day, during which time no trading takes place.

The method for calculating variation margin is specified in the instrument specifications on the exchange website. For example,for a futures contract on the RTS index One of the calculation formulas looks like this: fig1

For the RTS index, the minimum price step is calculated using the US dollar exchange rate. This affects financial result. If the value of the US dollar rises, then the futures price for RTS index falls and vice versa.

With specifications futures contracts traded on the CME can be found on the website of the Chicago exchanges

Margin trading

Margin trading – trading using borrowed funds provided by the broker. Brokers call margin trading “unsecured leveraged trades” or “uncovered positions in securities and cash.”

Why is margin trading needed?

If a trader has a small starting capital, the broker will be happy to offer to use leverage, because you will pay extra for these operations. For example, BCS offers all clients a leverage of 1:5, Sberbank offers 1:3, with the possibility of increasing it to 1:5. These proportions mean that having actually 1000 rubles, a trader will be able to operate with capital of 5000 (3000) rubles.

WITH margin trading The following concepts are closely related:

• CRMS, CPUR, KOUR (more details below)
• discount factors or risk levels
• portfolio value
• initial margin
• minimum margin
• forced closure or margin call

What is CRMS, CPUR, KOUR

Based on risk levels, brokers divide their trading clients into categories. And they estimate how much funds can be set for margin trading.

• CRMS – To clients with With standard at equals rclaim. Individuals with a small starting capital and lack of experience.
• KPUR – To clients with n elevated at equals rclaim. Individuals with bABOUTmore money from 600 thousand rubles, with bABOUTMore experience from 180 days of active trading.
• KOUR – To clients with O myself at equals rclaim. Legal entities.

For example, here is how the BCS broker explains the division into categories.

Use of borrowed funds in margin trading – paid service. Brokers indicate the cost of using borrowed funds on the website and in the agreement on brokerage services. Example from the Sberbank website:

Brokers take securities as collateral. The list of margin securities is also posted on the broker's website. These are the most liquid securities - “blue chips” - Sberbank, Gazprom, Rosneft, Lukoil.

For each such security, the broker develops discount factors or risk levels. Risk levels are needed to determineinitial and minimum trader margin(what is the initial and minimum margin is a few paragraphs below).

For example, three margin securities of the BCS broker for clients with a standard risk level.

Initial and minimum margin– terms related to the solvency of the trader.

Initial margin = value of the security*initial risk rate for this security

Initial Margin– part of the cost of a margin security that must be in the trader’s trading account. For margin securities you do not have to pay 100%; it is enough to make an initial margin.

Minimum margin = cost of securities * minimum risk rate for this security

On March 27, 2014, the BCS Company switches to compliance with the requirements of the Federal Financial Markets Service Order dated August 8, 2013 N 13-71/pz-n ON UNIFORM REQUIREMENTS FOR THE RULES OF BROKERAGE ACTIVITIES WHEN PERFORMING INDIVIDUAL TRANSACTIONS AT THE ACCOUNT OF CLIENTS (hereinafter referred to as the Order).

Below are the main innovations that appear as a result of the implementation of the requirements of this Order.

The changes that will take place on March 27, 2014 can be summarized as follows:

Transition from equal leverage for all margin securities to definition purchasing power separately for each security, based on risk rates.

Changing the risk parameters used.

Risk Rates

The risk rates that the BCS Company may apply to its clients are calculated by clearing organizations and published on the Internet. If more than one risk rate is calculated for a security, the BCS Company, in accordance with the Regulations, may apply any of them.

The list of securities with which the BCS Company provides the opportunity to work with incomplete coverage, and the applied risk rates, is disclosed on the company’s website.

Please note that publication of the list of securities and rates in accordance with the new rules will begin on March 26, 2014.

The order identifies the following risk categories that can be assigned to clients by the broker:

1) standard risk level;
2) increased level of risk;
3) special level of risk.

Individual may be classified as standard or increased risk. TO increased level of risk client - individual may be considered in the following cases:

The value of the client’s portfolio exceeds 3,000,000 rubles.

The value of the client’s portfolio exceeds 600,000 rubles, while the individual has been a client of the broker for the last 180 days, of which at least five days the broker entered into transactions with securities or derivative financial instruments at the expense of this person.

Legal entities, in accordance with the Order, are classified by the BCS Company as a special level of risk.

If the Client cannot be classified as a special or increased risk level, he is assigned standard risk level.

Risk parameters used

The main risk parameters used are initial value of the client's portfolio And minimum margin. The calculation of these indicators depends on the risk rate applied by the Company for a given security and the level of risk assigned to the client.

D = risk rate calculated by the clearing organization and applied by the BCS Company.

Meaning initial margin calculated based on the initial risk rate, determined using formulas depending on the client’s risk level.

Meaning minimum margin is calculated based on the corresponding initial risk rate, which is the same for all customer risk categories.

. The coefficient k for special risk is established by the BCS Company.

For all specified risk categories, if the Company’s client refuses to work with incomplete coverage, the initial and minimal risk are set at 100%, the opportunity to open short positions is not provided.

An important difference introduced by the new Order is calculating indicators for a planned item, which takes into account transactions with all execution dates. The mechanism of operation of the new risk parameters “initial margin” and “minimum margin” consists in their calculation and constant comparison with the “Portfolio value” indicator. Further, depending on the values ​​​​accepted by these indicators, the amount of risk in the portfolio is assessed and the need for certain actions to maintain the required levels of indicators is determined.

The values ​​of the indicators “initial margin”, “minimum margin” and “Portfolio value” are calculated in ruble terms.

An example of calculating risk rates depending on the rate disclosed by the clearing organization and applied by the BCS Company

How the requirements of the order will look in trading system QUIK

First of all, you need to update the QUIK version to the latest one (currently version 6.12.0.31 is recommended, it is the one posted on the website for download). To update the QUIK version, you need to run QUIK (for Windows 7 and 8 - run QUIK as an administrator, for which you need to right-click on the QUIK shortcut and select "Run as administrator"), go to Communication - Update program version, "Yes" , click “Accept files”. When QUIK needs to restart the program, agree.

To correctly display risk parameters, you first need to configure the “Client Portfolio” table. With the transition to the requirements of the new Order, a number of old indicators in the client portfolio have lost their meaning (margin level, current leverage, available limit), and they should be deleted. Others (Shoulder) have changed their meaning and are used differently.

You need to add the following parameters:

Portfolio value,
. Initial margin,
. Min.Margin,
. Speed ​​margin,
. Status,
. Requirement,
. UDS.

To do this, you need to right-click on the “Client Portfolio” table, select “Edit Table” and add the necessary parameters listed above one by one by highlighting the parameter and clicking the “Add” button. After adding parameters, click “Yes”.

Let's look at what the new indicators and their values ​​look like in the “Client Portfolio” table.

This example shows a client with a standard risk level. From the “Client Portfolio” table, by double-clicking on it, you can open the “Buy/Sell” table, in which, by setting up filters, you can see the established risk rates depending on the risk level of the client and the security. Risk rates can be displayed both exclusively for available securities, and for all securities available for work with incomplete coverage.

Meaning of fields in tables

Add to client portfolio one more client with a leverage value of 2, which corresponds to the CPUR.

This example shows two clients with the same assets, but different levels of risk specified by “Leverage”. Risk rates are reflected in the “Buy/Sell” table, their value can be checked by calculation table. The example shows how the risk rate affects the value of the “Initial Margin” and “Minimum Margin” indicators. CRMS requires less collateral to open a position, which allows such a client to open an uncovered position in a larger size than is possible with CRMS.

The following example also shows the difference in security requirements for clients with different risk levels (CRMS and CPUR), as well as the behavior of the “Status”, “Requirement” and “UDS” indicators with different ratios between the portfolio value and the initial and minimum margin values.

Examples of purchasing power calculations:

1. You have only DS (300,000 rubles) in your brokerage account, depending on the risk category of CPUR\KSUR, you need to find the Initial Margin rate for the security you are interested in and the type of long/short operation. For example, for Gazprom shares they are equal to KUR - 0.12/0.12 and for CRMS - 0.2256/0.2544. Since at the time of the transaction the value of the Portfolio cannot be less than the Initial Margin, then maximum size Long/short in rubles is calculated as follows:

KPUR: 300,000/0.12=2,500,000 rubles to buy Gazprom with leverage;
300,000/0.12=2,500,000 rubles for a short position on Gazprom.

KSUP: 300,000/0.2256=1329787 rubles for the purchase of Gazprom with leverage;
300,000/0.2544=1179245 rubles for a short position on Gazprom.

2. If there are only securities in the brokerage account, then to the calculation from point one you must also add discounting of their value according to the Initial Margin rates. For example, you are a KPUR. Your brokerage account has DS=0 and there are 1000 Gazprom shares with the current price of 125 rubles. The Initial Margin rate is 0.12, therefore the maximum available to you for purchasing Gazprom shares with leverage is:
/0.12=916667 rubles.

The remaining options for calculating purchasing power will be a combination of examples 1 and 2.

Example of calculating forced closure levels:

If the value of the Portfolio becomes less than the Minimum Margin, the broker performs a forced closure to the level where the value of the Portfolio exceeds the level of the Initial Margin. For example, there were 300,000 rubles in the brokerage account, a transaction was made to purchase 4,000 shares of Gazprom at 125 rubles, and the debt is 200,000 rubles. In this case, the Margincall level is calculated as follows:

KPUR:
X is the price, if it falls below which a forced closure occurs
0.0619*4000*X is the minimum margin

Margincall occurs if 0.0619*4000*X< 4000*Х — 200 000 или Х= 53,30 рублей

CRMS:
0.12*4000*X is the minimum margin
4000*X - 200,000 - this is the cost of the Portfolio
Margincall occurs if 0.12*4000*X< 4000*Х — 200 000 или Х= 56.82 рублей

ATTENTION: On March 20, 2014, an Internet conference was held on the BCS Express website dedicated to the upcoming changes after March 27. We strongly recommend that you devote 5-10 minutes of your time to familiarize yourself with.

You can also attend the free webinar “New Requirements for Margin Trading: Features and Opportunities”, which will take place on Wednesday, March 26th.

Best regards, BKS Broker

Minimum Margin - English Maintenance Margin, minimum amount capital that an investor must maintain in a margin trading account. For example, on the NYSE and NASD exchanges, after an investor has purchased securities using a margin account, the minimum margin required is 25% of the total market value securities held in the margin account. Keep in mind that this level is a minimum and many brokers have higher minimum margin requirements of 30-40%.

According to Federal Reserve regulatory requirements, when a trader enters into a trade using a margin account, certain key levels must be maintained for the duration of that trade. First of all, the broker cannot provide credit for accounts with a balance of less than $2000 in cash(or securities). Secondly, an initial margin of 50% is required before the trade can be executed. Finally, the minimum margin requires that equity was burned at least at the level of 25%. The investor will be required to deposit additional funds, called a “margin call,” if the value of the securities falls below the minimum margin requirement.