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Margin Lending

KIT Finance Europe offers its clients margin lending. Margin lending is implemented via the provision of “credit leveraging,” which can be used by clients to engage in operations involving the purchase of securities despite the lack of funds in their investment accounts, or those involving the sale of certain securities despite their absence in clients’ custody accounts.

The up-to-date List of Securities accepted as collateral for Marginal Transactions (came into force from 27.12.2018).

The Company is also ready to consider individual requests of clients in case of availability of other assets and demand in crediting.

Margin trading is available for portfolios with liquid securities and/or positive cash balances. The maximum purchasing power for trading on margin is determined by portfolio value and initial/maintenance margins.

The main principle is that margin trades can only be done if the portfolio value exceeds the initial margin.

Portfolio value = market value of liquid securities + positive cash balances (RUB, USD, EUR) – liabilities (short sales, negative cash balances)

Initial margin = sum of liquid securities’ market values times their initial risk rate

Maintenance margin = sum of liquid securities’ market values times their minimum risk rate

The initial and minimum risk rates for each security are given in the Liquid securities list.

The system will reevaluate the portfolio value and initial margin at the order price when an order is submitted.

If portfolio value is above the initial margin, the order will be accepted by the system.

If portfolio value is below the initial margin, the order will be rejected by the system.

The portfolio value and initial/maintenance margins are recalculated real-time to take into account the changes in security prices. If a client trades with leverage, i.e. borrows funds to purchase securities or sells securities lent by the broker, the client should monitor the portfolio value against the initial and maintenance margins. The client is advised that the portfolio value should not fall below the initial margin, in which case the positions should be reduced or more cash deposited on the account.

If portfolio value is below the maintenance margin, broker will close the positions under a margin-call.

For examples and more detailed explanation please check the presentation


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