Our system of tiered margining on CFDs enables clients to benefit from our lowest margins on the majority of positions.
What is tiered margining?
Tiered margining enables us to set margin rates that reflect and best fit the size of your aggregate position* in a particular market. The majority of positions will attract our lowest margin rates, reflecting the liquidity of the market at smaller deal sizes. The largest positions may require a higher margin, as it is more difficult to trade out of these positions quickly.
How does it work?
We will determine your initial margin using a table of four incremental tiers. The margin rate will increase progressively as your aggregate position moves up from one tier to the next. However, only the portion of your position that falls into a higher tier will be subject to its increased margin rate.
The range of the four tiers differs to suit each market, and the margin rate varies according to the type of account you hold.
Example: tiered margining for Anglo shares
The table below shows how tiered margining applies to Anglo American shares.
|Tier 1||Tier 2||Tier 3||Tier 4|
|Position size (Shares)||Up to 50,000||50,001–300,000||300,001–2,000,000||2,000,001+|
|Margin rate (Trader Account)||5%||20%||40%||75%|
If you hold a 200,000 AGL position, your initial margin will be determined as follows:
- 50,000 at 5% (Tier 1)
- 150,000 at 20% (Tier 2)
This equates to a weighted average margin rate of 16.25%, significantly lower than the outlay for an equivalent share purchase in the underlying market.
A full list of affected shares and their applicable deposit tiers can be found below:
The tiered margin requirements for shares and other applicable markets can be seen on the trading platform. Choose the ‘Get Info’ option on the dropdown menu for the market concerned.
Remember that the size of your overall position, and not the level of the initial margin, dictates your profit and loss. It is possible for losses to exceed your initial margin.