How can I find out the margin rate for margin trading and short selling? / What does each item mean?
The information of margin rate can be found on "Margin info" page, and you can perform the following steps:
- Enter the stock detail page.
- Tap "$" icon on the upper right of the page.
- Tap "Marginable" to enter Margin info page.
Initial Margin Ratio
Initial margin ratio is represented by a percentage of a purchase price that must be paid in cash when using a margin account.
Initial Margin Requirement = Shares x Price x Initial margin ratio
Assuming a user wants to purchase 10000 shares of stock for $50 each with an initial margin requirement of 80%, the initial margin equals $400,000 (10000 * $50 * 80% = $400,000). Therefore, the user can only open a position if his net assets are greater than $400,000; otherwise, the user cannot open a position.
Additionally, for US stocks, if the user's account does not have a sufficient amount of cash, the platform will utilize margin trading to complete the opening of a position. Assuming a user wants to short sell 10000 shares of stock priced at $50. When the initial margin ratio for the stock borrowing and selling is 85%, the margin requirement will be $425,000 (10000 * $50 * 85%= $425,000). Therefore, the short selling transaction can only be executed if the user's net asset value is greater than $425,000; otherwise, the user will not be able to open a short selling position.
Maintenance margin is the total amount of funds that must be remained to keep the position open, and is a given percentage of the market value of the current position.
Maintenance margin = Market value of account holdings * Maintenance margin ratio