Halifax Trader Work Station - Margin Calculations

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The platform applies margin calculations in the following ways:

1. At the time of a trade.
2. In real-time throughout the trading day.
3. Overnight.

Time of the trade

When you open a new position, we apply the following:

• Initial Minimum Equity Requirement
• Time of Trade Initial Margin Calculation
• Time of Trade Position Leverage Check

Initial Minimum Equity Requirement

You are required to have a minimum of $2,000 or USD equivalent of securities equity with loan value or commodities net liquidation value to open a new position. If you do not meet this initial requirement, you will be unable to open a new position in your Reg T Margin account.

Time of Trade Initial Margin Calculation

Upon submission of an order, a check is made against real-time available funds. If available funds, after the order request, would be greater than or equal to zero, the order is accepted; if available funds would be negative, the order is rejected. Time of Trade Initial Margin calculations are pictured below. The initial margin used in these calculations is the platform's initial margin, which is listed on the product-specific Margin pages.

Securities Time of Trade Initial Margin Calculation

Commodities Time of Trade Initial Margin Calculation

Time of Trade Position Leverage Check

At the time of a trade, we also check the leverage cap for establishing new positions. The leverage cap helps to prevent situations in which there is little or no apparent market risk in holding very large positions but there may be excessive settlement risk. We perform the following calculation to ensure that the Gross Position Value is not more than 30 times the Net Liquidation Value minus the futures options value:

Securities Gross Position Value <= 30 (Net Liquidation Value - Futures Options Value)

If the result of this calculation is true, then you have not exceeded the leverage cap for establishing new positions. If the trade would put your account over the leverage cap (that is, the calculation is not true), then the order will not be accepted.

Real-Time Margin Calculations

Throughout the trading day, we apply the following calculations to your account in real-time:

• Real-Time Maintenance Margin Calculation
• Real-Time Position Leverage Check
• Real-Time Cash Leverage Check
• Decreased Marginability Calculations

Real-Time Maintenance Margin Calculation

Real-Time Maintenance Margin calculations is pictured below. The maintenance margin used in these calculations is the platform's maintenance margin requirement, which is listed on the product-specific Margin pages. In the calculations below, "Excess Liquidity" refers to excess maintenance margin equity.

Securities Real-Time Maintenance Margin Calculation

Commodities Real-Time Maintenance Margin Calculation

In addition, any account that has a negative cash balance on a trade date or settlement date basis will be liquidated. It should be noted whereas futures settle each night, futures options are generally treated on a premium style basis, which means that they will not settle until the options are sold or expire. Therefore, for certain combination futures and futures options positions, there may be a mismatch in cash flows which could cause cash to go negative even though Net Liquidation Value is positive. In addition, there are a handful of options where local custom is to cash settle the option each night at the clearing house (e.g. HKFE HSI Options), but we may choose to margin these options on a premium style basis.

Real-Time Gross Position Leverage Check

There is a real-time check on overall position leverage to ensure that the Gross Position Value is not more than 50 times the Net Liquidation Value minus the futures options value. The leverage cap helps to prevent situations in which there is little or no apparent market risk in holding very large positions but there may be excessive settlement risk. The calculation can be expressed as:

Securities Gross Position Value <= 50 (Net Liquidation Value - Futures Options Value)

If the result of this calculation is not true, positions may be liquidated to reduce the Gross Position Leverage.

Real-Time Cash Leverage Check

An additional leverage check on cash is made to ensure that the total FX settlement value is no more than 250 times the Net Liquidation Value as follows:

Total Settlement Value of All FX Trades <= 250 (Net Liquidation Value)

If the result of this calculation is not true, account liquidation may occur.

Overnight Margin Calculations

Stocks and futures have additional margin requirements when held overnight. For overnight margin requirements for stocks, click the Stocks link in the margins home page. Futures margin requirements are determined by each exchange and can change frequently. The platform applies overnight initial and maintenance requirements to futures as required by each exchange. For more information, click the Futures link in the margins home page.