CityIndex Updates Margin Policy

CityIndex have updated their margin policy and introduced ‘Margin Close Out’, a new risk and margin management feature which they claim puts clients firmly in charge of their available margin and replaces margin calls, warnings or other former alerts as provided by them in the past.

A new Margin Level Indicator is now provided in the left hand corner of the trading platform. This feature allows you to monitor your Margin Level in order to maintain it above the Margin Close Out Level.

The margin level indicator displays the ratio of your net equity to total margin, which is the percentage of your margin requirement that is covered by your available funds plus any realised profit/loss.

Eg: If your margin indicator level is greater than 200% this means that you have more than double the amount of funds needed to keep your positions open. If your margin indicator is at 100% or below then your open trades will be closed. (Trades closed when your trading balance is negative).

CityIndex will no longer do margin calls and clients must monitor their trades and balances.

Basically the way it works is that if your Margin Level (a percentage figure representing the ratio of net equity to total margin) is at or below your Margin Close Out Level, CityIndex may close all or any of your Open Positions immediately and without notice. See clause 11 of the new Terms and Polices for more details.

From CityIndex’s terms and conditions of use -:

11.1 – If the Margin Level for your Account reaches or falls below the Margin Close Out Level, this will be classified as an Event of Default under clause 16. In such circumstances we may, among other things, close all or any of your Open Positions immediately and without notice and refuse to execute new Trades until your Margin Level is 100% or greater. We will close your Open Positions at Our Price prevailing at the time when your Open Positions are closed.

11.2 – We may but are not obliged to contact you before we take any action under clause 11.1.

11.3 – You will be notified of the Margin Close Out Level applicable to your Account in the Key Service Features. We may alter the Margin Close Out Level applicable to your Account at any time. Subject to our rights in clauses 15 and 16, we will provide you with at least three (3) days notice of any change to your Margin Close Out Level. It is your responsibility to remain informed about the Margin Close Out Level applicable to your Account.

11.4 – We will be entitled to notify you of an alteration to your Margin Close Out Level by any of the following means: post, telephone, fax, email, text message or by posting notice of the increase on the Trading Platform.

11.5 – The Margin Close Out Level is designed to help limit the extent of your trading losses. We do not however guarantee that your Open Positions will be closed when the Margin Level for your Account reaches the Margin Close Out Level or that your losses will be limited to the amount of funds you have deposited in your Account.

Comments: Seems that this change has caught a few CityIndex clients by surprise as some had some not very ‘complimentary comments’ to say about it as CityIndex’s new margin system automatically closed their trades overriding their stop loss orders.

However, let’s face it, should you go over your margin and the trade goes against you, you owe money to the company and CityIndex are trying to reduce bad debts with their new policy, and as bookies, I am sure is a serious problem. The solution is to reduce the trade size so that the price has more room to move. If you put all your account on margin, except for a few points, you must expect to be closed out. It’s like having the stop too close.

Tags: City Index, cityindex, margin

This entry was posted on Monday, September 21st, 2009 at 7:44 pm and is filed under Broker News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.