Tiered margining
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 HSBC shares
The table below shows how tiered margining applies to HSBC shares.
| Tier 1 | Tier 2 | Tier 3 | Tier 4 | |
|---|---|---|---|---|
| Position size (shares) | Up to 150,000 | 150,001– 900,000 | 900,001– 30,000,000 | 30,000,000+ |
|
Margin rate (Trader Account) |
5% | 20% | 40% | 90% |
|
Margin rate (Select Account) |
5% | 10% | 25% | 90% |
As a Trader or Select Account holder, if you hold a CFD position of 50,000 HSBC shares, your initial margin will be 5%.
If you are a Trader Account holder with a 200,000 HSBC position, your initial margin will be determined as follows:
- 150,000 at 5% (Tier 1)
- 50,000 at 20% (Tier 2)
This equates to a weighted average margin rate of 8.75%, significantly lower than the outlay for an equivalent share purchase in the underlying market.
More information
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.
* For the purposes of tiered margining, your aggregate position includes your non–controlled-risk open positions and orders to open.
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CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.