Margin Ratio and Haircut

Customers may deposit or buy marginable investment products as a collateral for margin financing. The amount which Customers may leverage on will be determined by the Margin Ratio of the collateral. Based on the Margin Ratio of the investment product, a haircut will be applied to the market value of such product when calculating the collateral to determine the risk level of the trading account.

 

Margin Ratio	Haircut
70%	9.639%
65%	15.663%
60%	21.687%
55%	27.711%
50%	33.735%
45%	39.760%
40%	45.784%
35%	51.808%
30%	57.832%
25%	63.856%
20%	69.880%
15%	75.904%
10%	81.928%
0%	100.00%

 

 

Buying Power

Customer buying power is calculated as:

[Total Cash Balance + (Market value of Stocks*Margin Ratio)]/(1-Margin Ratio)

 

Example 1:

If a customer deposits $ 1,000 and wish to purchase a stock with Margin Ratio of 70%.

 

Maximum amount which the customer may purchase will be:

[1000 + (0*0.7)] / (1-0.7) = $ 3,333.33