City Index: Margin Close Out Level Reduced to 80%

As of 22nd November 2009, City Index will be reducing clients’ Margin Close Out Level from 100% to 80%. City Index’s annoucement letter follows below…

Why are City Index taking this decision?

Our Margin Close Out Policy provides strong risk management, helping to reduce the likelihood of your account incurring losses that exceed your cash balance. We believe that providing you with the greatest amount of trading flexibility whilst maintaining a strong and transparent risk management procedure is of utmost importance to all of our clients.

Reducing your Margin Close Out Level will give you the benefit of increased trading flexibility:

-> Allowing you more time to fund your account or adjust your positions.
-> Benefit from markets moving back in your favour.

How Does Margin Close Out Work following this change?

Your Margin Level is calculated as Net Equity/Margin Requirement and is displayed on our trading platform as a percentage via the Margin Level Indicator.

-> Above 100% you can add positions providing you have sufficient funds.
-> Between 100% and 80% you cannot add positions but can add funds or reduce positions to improve your Margin Level.
-> At or below 80% we may close out part or all of your positions.

Note: The Margin Close Out Level is designed to 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: This can only be good as City Index’s new margin stop out policy had many of their clients running for the exit door as their trades started getting closed out without their stop loss levels ever being hit. The question is whether the revision will be sufficient? I do agree in principle that clients need to use sensible margins but in most cases if clients have multiple open positions, it would suffice to close out just the last trade to bring the account back in-line; closing out all positions is too harsh.

Tags: City Index, cityindex, margins

This entry was posted on Monday, November 16th, 2009 at 6:43 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.