Margining
Margin is a term derived from the futures market, and provides for leveraged trading in financial products.
In its most simple format, if you offered the trading of an instrument at 5% margin, you are in fact saying that you need only to deposit 5% of the total purchase cost of that deal to open that position.
Initial margin requirements for spread betting positions are calculated by applying either a notional trading requirement (NTR) to your stake or a percentage to the total contract value. All shares are margined between 1 and 10%. NTRs are applied to Index, Treasury, Commodity, Foreign Exchange, Sector and Bullion bets and is a simple method of calculating an initial margin for less volatile instruments. Each instrument that uses NTRs has an NTR value attached to it. These can be found in the product tables within the Fees and Charges guide.
Share Bets
Initial margin = (stake x share price) x Margin (1-10%)
Index, Treasury, Commodity, Foreign Exchange, Sector and Bullion bets:
Initial margin = stake x NTR
Example: (share bet)
You buy £20 per point of the Vodafone Rolling Cash© bet @ 140.25. This provides a notional position of £20 x 140.25 points (£2,805). Vodafone is margined at 5% so you would need at least £140.25 initial margin to open this position.
Example: (NTR margined bet)
The UK100 Index cash bet has an NTR of 50. Therefore for every £1 worth of bet you place in the UK100, this is multiplied by the NTR for the initial margin requirement. A bet to sell £5 UK100 rolling cash therefore has an NTR deposit requirement of £250, (£5 x 50 NTR).
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