Margin Trading
Stock
US Stocks Margin Requirements for US
As a resident of the US trading stocks in US you are subjected to Rules-based margin and Portfolio Margin. The complete margin requirement details are listed in the sections below.
The following calculations apply only to Margin, IRA Margin and Cash or IRA Cash. See our Portfolio Margin section for US Options requirements in a Portfolio Margin account.
FINRA and the NYSE have imposed rules to limit small investor day trading. Customers that these organizations classify as Pattern Day Traders are subject to special Day Trading Restrictions for U.S. and non-U.S. securities.
The following table shows stock margin requirements for initial (at the time of trade), maintenance (when holding positions), and Overnight Reg T (Regulatory End of Day Requirement) time periods.
Long Position
| Margin | |
| Initial Margin | 25% 1 * Stock Value (minimum of $2,000 or 100% of the purchase price, whichever is less) |
| Maintenance Margin | 25% * Stock Value |
| Reg T End of Day Initial Margin | 50% * Stock Value |
| Cash or IRA Cash | 100% * Stock Value |
| IRA Margin | Same as Cash |
Short Positions
| Margin | |
| Initial Margin | 30% 2 * Market Value of Stock, if Stock Value > $16.67 per share $5.00 per share, if Stock Value < $16.67 and > $5.00 100% of Market Value of Stock, if Stock Value < $5.00 $2.50 per share, if Stock Value <= $2.50 |
| Maintenance Margin | Same as Initial Margin |
| Reg T End of Day Initial Margin | Same as Reg T End of Day for Long Positions. |
| Cash or IRA Cash | N/A |
| IRA Margin | Same as Cash |
Non-Marginable Long or Short Positions
| Margin | |
| Initial Margin | 100% * Stock Value |
| Maintenance Margin | Same as Initial Margin |
| Reg T End of Day Initial Margin | Same as Initial Margin |
| Cash, Individual or IRA | Same as Initial Margin, Only Long Positions |
| IRA Margin | N/A |
Special Margin Stocks
We may reduce the collateral value of securities (reduces marginability) for a variety of reasons, including:
- small market capitalization or small issue size
- low liquidity in the collective primary/secondary exchanges
- involvement in tenders and other corporate action
Changes in marginability are generally considered for a specific security. However, in cases of concerns about the viability or liquidity of a company, marginability reductions will apply to all securities issued by, or related to, the affected company, including fixed income, derivatives, depository receipts, etc.
See the section on Decreased Marginability Calculations on the Margin Calculations page for information about large position and position concentration algorithms that may affect the margin rate applied to a given security within an account and may vary between accounts.
US Stocks Margin Requirements for China
Based on your selection to trade stocks in US, you are subjected to the same Rules-based margin and Portfolio Margin as US residents. The complete margin requirement details are listed in the sections below.
The following calculations apply only to Margin, IRA Margin and Cash or IRA Cash. See our Portfolio Margin section for US Options requirements in a Portfolio Margin account.
FINRA and the NYSE have imposed rules to limit small investor day trading. Customers that these organizations classify as Pattern Day Traders are subject to special Day Trading Restrictions for U.S. and non-U.S. securities.
The following table shows stock margin requirements for initial (at the time of trade), maintenance (when holding positions), and Overnight Reg T (Regulatory End of Day Requirement) time periods.
Long Position
| Margin | |
| Initial Margin | 25% 1 * Stock Value (minimum of $2,000 or 100% of the purchase price, whichever is less) |
| Maintenance Margin | 25% * Stock Value |
| Reg T End of Day Initial Margin | 50% * Stock Value |
| Cash or IRA Cash | 100% * Stock Value |
| IRA Margin | Same as Cash |
Short Positions
| Margin | |
| Initial Margin | 30% 2 * Market Value of Stock, if Stock Value > $16.67 per share $5.00 per share, if Stock Value < $16.67 and > $5.00 100% of Market Value of Stock, if Stock Value < $5.00 $2.50 per share, if Stock Value <= $2.50 |
| Maintenance Margin | Same as Initial Margin |
| Reg T End of Day Initial Margin | Same as Reg T End of Day for Long Positions. |
| Cash or IRA Cash | N/A |
| IRA Margin | Same as Cash |
Non-Marginable Long or Short Positions
| Margin | |
| Initial Margin | 100% * Stock Value |
| Maintenance Margin | Same as Initial Margin |
| Reg T End of Day Initial Margin | Same as Initial Margin |
| Cash, Individual or IRA | Same as Initial Margin, Only Long Positions |
| IRA Margin | N/A |
Special Margin Stocks
We may reduce the collateral value of securities (reduces marginability) for a variety of reasons, including:
- small market capitalization or small issue size
- low liquidity in the collective primary/secondary exchanges
- involvement in tenders and other corporate action
Changes in marginability are generally considered for a specific security. However, in cases of concerns about the viability or liquidity of a company, marginability reductions will apply to all securities issued by, or related to, the affected company, including fixed income, derivatives, depository receipts, etc.
See the section on Decreased Marginability Calculations on the Margin Calculations page for information about large position and position concentration algorithms that may affect the margin rate applied to a given security within an account and may vary between accounts.
US Stocks Margin Requirements for Europe
As a resident of Europe trading stocks in US you are subjected to Rules-based margin and Portfolio Margin. The complete margin requirement details are listed in the sections below.
The following table shows stock margin requirements for initial (at the time of trade), maintenance (when holding positions), and Overnight Reg T (Regulatory End of Day Requirement) time periods.
Long Position
| Margin | |
| Initial Margin | Margin requirements are determined by risk-based portfolio analysis models specified by each exchange. For details, visit the specific exchange site in question. |
| Maintenance Margin | 25% * Stock Value |
| Reg T End of Day Margin | 50% * Stock Value |
| Cash or IRA Cash | 100% * Stock Value |
Short Positions
| Margin | |
| Initial Margin | Same as Initial for long positions |
| Maintenance Margin | Same as Initial for long positions |
| Reg T End of Day Margin | Same as Reg T End of Day for long positions |
| Cash or IRA Cash | N/A |
Bonds
US Fixed Income Margin Requirements for US
As a resident of the US trading bonds in US you are subjected to Rules-based margin. The complete margin requirement details are listed in the section below.
The following rules apply for Margin and Portfolio Margin accounts. Bonds must be paid-in-full in a Cash account.
FINRA and the NYSE have imposed rules to limit small investor day trading. Customers that these organizations classify as Pattern Day Traders are subject to special Day Trading Restrictions for US securities.
Government Bonds Margin
| US TREASURY SECURITIES | INITIAL MARGIN REQUIREMENTS | MAINTENANCE MARGIN REQUIREMENTS |
|---|---|---|
| Less than six months to maturity | 1% * Market Value | Same as Initial Margin |
| Less than one year to maturity | 2% * Market Value | Same as Initial Margin |
| One year but less than three years to maturity | 3% * Market Value | Same as Initial Margin |
| Three years but less than five years to maturity | 4% * Market Value | Same as Initial Margin |
| Five years but less than ten years to maturity | 5% * Market Value | Same as Initial Margin |
| Ten years but less than twenty years to maturity | 7% * Market Value | Same as Initial Margin |
| Twenty years or more to maturity | 9% * Market Value | Same as Initial Margin |
| Zero coupon bonds with five years or more to maturity | 3% * Principal Amount of the Obligation | Same as Initial Margin |
Municipal Bonds
| INITIAL MARGIN REQUIREMENTS | MAINTENANCE MARGIN REQUIREMENTS | |
|---|---|---|
| Investment Grade | 1.25 * Maintenance Margin | 25% * Bond Market Value |
| Speculative Grade | 1.25 * Maintenance Margin | 50% * Bond Market Value |
| Junk Grade | 1.25 * Maintenance Margin | 75% * Bond Market Value |
| Defaulted | 100% * Bond Market Value | 100% * Bond Market Value |
Corporate Bonds
The margin for the following types of corporate bonds is determined using a proprietary Value At Risk (VAR) methodology :
- Investment Grade
- NYSE-listed Speculative Grade
- NYSE-listed Junk Grade
The theoretical price of each bond is calculated over a range of interest rate offsets to the prevailing Treasury yield curve. The result of such a calculation is illustrated in the following figure. As the interest rate offset increases, the bond price decreases. The upward curvature of the line is indicative of the “convexity” of the bond.
The VAR is the worst case loss in the bond price over a specified range of underlying interest rate changes. The scanning ranges are listed in the table below.
| BOND TYPE | BASIS POINTS |
|---|---|
| Investment Grade (Moody’s Aaa to Baa3) | 200 basis points |
| NYSE-Listed Speculative Grade (Moody’s Ba1 to B3) | 300 basis points |
| NYSE-Listed Junk Grade (Moody’s Caa1 to C) | 400 basis points |
Within the Value At Risk calculation, bonds that contain embedded options (calls or puts) are subjected to stress tests that separately increase and decrease the interest rate period volatilities used to calculate the theoretical price of the bond by 15% of their values. Under each volatility change scenario, another theoretical price curve is calculated over the same range of interest rate offsets to the prevailing Treasury yield curve. The VAR for bonds with embedded options is taken as the worst case loss on the appropriate interest rate scanning range across each of the unchanged, up and down volatility scenarios.
The regulatory minimum margin of 10% of market value applies to investment grade bonds. The regulatory minimum of the larger of 20% of market value and 7% of face value applies to non-investment grade, NYSE-listed bonds.
Non-NYSE-Listed Speculative and Junk Bonds are margined as follows:
| BOND TYPE | INITIAL MARGIN | MAINTENANCE MARGIN |
|---|---|---|
| Non-NYSE-Listed Speculative Grade | 50% * Bond Market Value | 50% * Bond Market Value |
| Non-NYSE-Listed Junk Grade | 70% * Bond Market Value | 70% * Bond Market Value |
Bonds that have defaulted or that are not rated are not eligible for margin treatment.
Special Margin Bonds
We may reduce the collateral value of securities (reduces marginability) for a variety of reasons, including:
- small market capitalization or small issue size
- low liquidity in the collective primary/secondary exchanges
- involvement in tenders and other corporate action
Changes in marginability are generally considered for a specific security. However, in cases of concerns about the viability or liquidity of a company, marginability reductions will apply to all securities issued by, or related to, the affected company, including bonds, derivatives, depository receipts, etc.
In addition, please see discussions on special risk management algorithms, for example, large position and position concentration algorithms which may affect the margin rate applied to a given security within an account and may vary between accounts.
US Fixed Income Margin Requirements for China
Based on your selection to trade bonds in US, you are subjected to the same Rules-based margin as US residents. The complete margin requirement details are listed in the section below.
US Fixed Income Margin Requirements for Europe
As a resident of Europe trading bonds in US you are subjected to Rules-based margin. The complete margin requirement details are listed in the section below.
Foreign Sovereign Debt Securities
| LONG POSITIONS | ||
|---|---|---|
| Initial Margin Requirements | Maintenance Margin Requirements | |
| Rated AAA to AA3: | ||
| Less than 6 months to maturity | 2.5% * Market Value | 2% * Market Value |
| Less than 1 year to maturity | 3.75% * Market Value | 3% * Market Value |
| More than 1 year and less than 3 years to maturity | 6.25% * Market Value | 5% * Market Value |
| At least 3 years and less than 5 years to maturity | 7.5% * Market Value | 6% * Market Value |
| At least 5 years and less than 10 years to maturity | 10% * Market Value | 8% * Market Value |
| At least 10 years and less than 20 years to maturity | 12.5% * Market Value | 10% * Market Value |
| 20 years or more to maturity | 15% * Market Value | 12% * Market Value |
| Zero coupon bonds with 5 years or more to maturity | Min (Market Value, 1.25 * Maintenance) | Max (Specified Maintenance Amount 3, 3% * Face Value) |
| Rated A1 – BAA2 | 18.75% * Market Value | 15% * Market Value |
| Rated Ba1-B3 | Min (Market Value, 1.25 * Maintenance) | Min (25% Market Value, 10% Face Value) |
| Rated Caa1-C | Min (Market Value, 1.25 * Maintenance) | Min (50% Market Value, 20% Face Value) |
| Defaulted | 100% * Market Value | 100% * Market Value |
| Not Rated | 100% * Market Value | 100% * Market Value |
Mutual Funds
US Mutual Fund Margin Requirements for US
As a resident of the US trading mutual funds in US you are subjected to Rules-based margin. The complete margin requirement details are listed in the section below.
The following calculations apply only to Margin and Cash Accounts.
FINRA and the NYSE have imposed rules to limit small investor day trading. Customers that these organizations classify as Pattern Day Traders are subject to special Day Trading Restrictions for US securities.
The following table shows mutual fund margin requirements for initial (at the time of trade) and maintenance (when holding positions).
| MARGIN ACCOUNT: INITIAL MARGIN | MARGIN ACCOUNT: MAINTENANCE MARGIN | REG T END OF DAY | CASH ACCOUNTS | |
|---|---|---|---|---|
| Mutual Fund Long Position | ||||
| First 30 days: | 100% * Net Asset Value | 100% * Net Asset Value | 100% * Net Asset Value | 100% * Net Asset Value |
| After 30 days: | 25% * Net Asset Value | 25% * Net Asset Value | 50% * Net Asset Value | 100% * Net Asset Value |
| Money Market Fund Long Position | ||||
| 1% * Net Asset Value 1 Cannot borrow against for 30 days (no debit balance) | 1% * Net Asset Value1 Cannot borrow against for 30 days (no debit balance) | 1% * Net Asset Value1 Cannot borrow against for 30 days (no debit balance) | 100% * Net Asset Value | |
| Short Positions | ||||
| N/A | N/A | N/A |
US Mutual Fund Margin Requirements for China
Based on your selection to trade mutual funds in US, you are subjected to the same Rules-based margin as US residents. The complete margin requirement details are listed in the section below.
The following calculations apply only to Margin and Cash Accounts.
The following table shows mutual fund margin requirements for initial (at the time of trade) and maintenance (when holding positions).
| MARGIN ACCOUNT: INITIAL MARGIN | MARGIN ACCOUNT: MAINTENANCE MARGIN | REG T END OF DAY | CASH ACCOUNTS | |
|---|---|---|---|---|
| Mutual Fund Long Position | ||||
| First 30 days: | 100% * Net Asset Value | 100% * Net Asset Value | 100% * Net Asset Value | 100% * Net Asset Value |
| After 30 days: | 25% * Net Asset Value | 25% * Net Asset Value | 50% * Net Asset Value | 100% * Net Asset Value |
| Money Market Fund Long Position | ||||
| 1% * Net Asset Value 1 Cannot borrow against for 30 days (no debit balance) | 1% * Net Asset Value 1 Cannot borrow against for 30 days (no debit balance) | 1% * Net Asset Value 1 Cannot borrow against for 30 days (no debit balance) | 100% * Net Asset Value | |
| Short Positions | ||||
| N/A | N/A | N/A |
- “Non-US funds” available with the following restrictions: U.S., Canada, Iran, North Korea, Libya, Syria and U.S. territories Puerto Rico, U.S. Virgin Islands, American Samoa and Northern Marianas Islands.
- Margin Requirements and info the same as US ones