Chapter 2

Margin Call=MC

All MC rates are calculated as percentage rates of Equity on account to Used Margin on the same account

Way of MC execution is set on the system level. MC rates are set on system level; also on account level.

Account setting of MC rate always overrides system setting of MC rate

Three ways of MC execution:

“MANUAL Margin Call Execution”

“AUTOMATIC Margin Call Execution”

“THREE LEVELS of Margin Call”

Way of MC execution is determined by value of rule MARGIN_CALL_EXEC on the system level

Rule MARGIN_CALL_EXEC has 3 values: MANUAL; AUTOMATIC; THREE LEVELS of MC

MANUAL Margin Call Execution:

MANUAL Margin Call Rate is determined as value of rule MC: MANUAL_MC_RATE on the system level; also as account setting. Numeric value means % rate

MC condition: MANUAL Margin Call occurs when

Equity becomes <= MC_MANUAL_MC_RATE of Used Margin.

“Manual MC message” sent to dealer and trader

* (see “Manual MC message” )

System generates Margin Call [closing] orders on all open positions.

Margin Call Marc is placed on the account [Account Information Window; MC column; red capital ”Y” mark]

All Margin Call orders are sent to Dealer for manual execution. [Trader’s order’s window on Dealer’s screen] [Margin Call orders are also shown on Trader’s screen]

Dealer has to manually confirm any or all Margin Call orders.

Dealer may remove MC orders; Trader cannot remove MC orders [Access violation Message]

Dealer has to manually Reset Margin Call on account. [remove MC mark = restore account for trading]

IF dealer reset MC without executing any of MC orders, remaining MC orders disappear from dealer’s screen.

If MC condition did not disappear [account Equity still <= MANUAL_MC_RATE of Used Margin] manual MC reoccurs at the next price update

If dealer does not manually reset Margin Call mark on account, trading on account is restricted: NO new positions, NO ES/EL orders; NO closing; NO hedging of already open positions

If dealer or trader attempts any trading activity: system generates “Margin Call message”

**(see “Margin Call message”)

AUTOMATIC Margin Call Execution:

AUTOMATIC Margin Call Rate is determined as value of rule

MC: AUTOMATIC _MC_RATE on the system level; also as account setting.

Numeric value means % rate

MC condition: AUTOMATIC Margin Call occurs when

Equity becomes <= AUTOMATIC _MC_RATE of Used Margin.

Open positions on account are being automatically closed by the system in the ‘First in – First out’ order, until the MC condition disappears.

“Automatic MC message” sent to dealer and trader

*** (see “Automatic MC message”)

MC on account is being reset automatically [Account is automatically restored for trading]

THREE LEVELS of Margin Call

MC_1 - THREE LEVELS of MC; MC level 1

MC_2 - THREE LEVELS of MC; MC level 2

MC_3 - THREE LEVELS of MC; MC level 3

Three different MC conditions at three different % levels of equity to used margin are being set on the system or on the account. Different MC events are associated with every level of Margin Call.

All MC events in the “THREE LEVELS of Margin Call” are executed automatically.

MC 1:

MC_1 Rate is determined as value of rule MC: 3_levels_MC_RATE_(1) on the system level; also as account setting. Numeric value means % rate

MC condition: Occurs ONLY at End of Day Time [EOD]

[EOD =Value of Rule: Time:_Close_Day_Time] AND IF Equity at EOD < MC_1_Rate of Used Margin

(Attention: <, not <= )

MC_1 Event #1: At EOD :

MC_1 mark is set on the account [Account Information Window; MC column; red ”1” mark]

AND

Timer starts according to value of rule MC:_3_levels_MC_Level_1_Action_Timer_(hours)

AND

“MC_1 message #1” sent to dealer and trader

****(see “MC_1 message #1”)

2 variants of MC_1 message #1 text:

Determined by value of the rule MC:_3_levels_MC_Level_1_Action_Type

Rule MC:_3_levels_MC_Level_1_Action_Type has 2 values: “Close”; “Hedge”

If rule value is “Close”, text:

“Otherwise all positions will be closed…

If rule value is “Hedge”, text:

“Otherwise all positions will be hedged…

“Action Time” at the end of message: Determined by value of rule MC:_3_levels_MC_Level_1_Action_Timer_(hours) [EOD + Action_Timer]

Example: EOD = 15:00; Action_Timer = 1:00 Action Time = 15 + 1 = 16:00

While MC_1 mark is set on the account: account is not allowed to open new positions due to insufficient margin, however account is allowed to place ES/EL orders, hedge or close open positions

HOWEVER unhedging of hedged pairs is restricted

(even if trader manually hedged position before or after MC1: unhedging in restricted.)

Closing of open positions is only allowed by closing hedged pairs through “Close with Hedge” option

Message: “margin call was issued on this account”

While MC_1 mark is set on the account: account depends on value of rule:

MC:3 levels:MRGNCALL_FREESE

Rule has 2 values : “YES” : “NO”

IF Rule MC:3 levels:MRGNCALL_FREESE value is NO
AND

At any time before “Action Time” account Equity becomes >= Used Margin

DUE TO ANY REASON: Favorable market movement or Decrease of Used Margin by liquidation of open position or Increase of Account Balance:

THEN

MC_1 automatically Resumed [ MC_1 mark is automatically removed from account]:

IF Rule MC:3 levels:MRGNCALL_FREESE value is YES
THEN

Even if At any time before “Action Time” due to Favorable market movement account Equity becomes >= Used Margin, MC_1 IS NOT Resumed .

ONLY IF At any time before “Action Time” Used Margin is decreased due to liquidation of open position by sufficient amount [MC_1 Amount] or more,

OR Account Balance Increased by sufficient amount [MC_1 Amount] or more

THEN

MC_1 automatically Resumed [ MC_1 mark is automatically removed from account]:

[MC_1 Amount= Used Margin – Equity at MC_1 condition moment]

MC_1 Event #2: Action Time – 30 min

If MC_1 mark is still set on the account

“MC_1 message #2” sent to dealer and trader.

***** (see “MC_1 message #2”)

2 variants of MC_1 message #2 text:

Determined by value of rule MC:_3_levels_MC_Level_1_Action_Type

If rule value is “Close”, then text:

“All positions will be closed after …”

If rule value is “Hedge”, text:

“All positions will be hedged after …”

“Action Time” at the end of message: Determined by value of rule MC:_3_levels_MC_Level_1_Action_Timer_(hours) [EOD + Action_Timer]

MC_1 Event #3: Action Time .

If MC_1 mark is still set on the account

All Open positions are automatically Closed or Hedged.

Action Type is determined by value of rule MC:_3_levels_MC_Level_1_Action_Type

If rule value is “Close”, then all Open positions are automatically Closed

If rule value is “Hedge”, then all Open positions are automatically Hedged

If all Open positions are automatically Closed, then MC_1 mark on account is being reset automatically [Account is automatically restored for trading]

all Open positions are automatically Hedged then MC_1 mark remains on the account

Closing of open positions is only allowed by closing hedged pairs through “Close with Hedge” option. Unhedging of hedged pairs is restricted.

MC 2:

MC_2 Rate is determined as value of rule MC: 3_levels_MC_RATE_(2) on the system level; also as account setting. Numeric value means % rate

MC_2 condition: Occurs when Equity < = MC_2_Rate of Used Margin

MC_2 Event:

All Open positions are automatically Hedged.

AND

MC_2 mark is set on the account [Account Information Window; MC column; red ”2” mark]

AND

“MC_1 message #2” sent to dealer and trader

****** (see “MC_2 message”)

While MC_2 mark is set on the account: account is not allowed to open new positions due to insufficient margin, however account is allowed to place ES/EL orders. or close open positions

Closing of open positions is only allowed by closing hedged pairs through “Close with Hedge” option. unhedging of hedged pairs is restricted

Message: “margin call was issued on this account”

While MC_2 mark is set on the account: account depends on value of rule:

MC:_3_levels_MC_Level_2_Action_Type

Rule MC:_3_levels_MC_Level_2_Action_Type has 2 values : “CLOSE” ; “NOT”

IF Rule MC_Level_2_Action_Type value is CLOSE then all open positions (already hedged)
are automatically closed at the EOD

IF Rule MC_Level_2_Action_Type value is NOT then all open positions (already hedged)
remain open indefinitely

MC 3:

MC_3 Rate is determined as value of rule MC: 3_levels_MC_RATE_(3) on the system level; also as account setting. Numeric value means % rate

MC_3 condition: Occurs when Equity < = MC_3_Rate of Used Margin

MC_3 Event:

All Open positions are automatically Closed

MC_3 mark is set on the account [Account Information Window; MC column; red ”3” mark]

AND

“MC_3 message #2” sent to dealer and trader

****** (see “MC_3 message”)

Dealer can to manually Reset MC_3 mark on account. [remove MC mark]

However MC_3 mark on the account in NOT preventing account from opening of new positions (if account has sufficient Usable Margin); MC_3 mark is removed automatically after the first change of account balance [Deposit/ Withdrawal/ Adjustment] or opening of the first new position

“Manual MC message” sent to dealer and trader

Sample message: