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Glossary for Margin
Trading
Margin Account
Trading on "Margin" is using your stock holdings as collateral to borrow money from your broker to buy more stock(s). Investors generally use margin to increase their buying power and enjoy the trading flexibility without having to fully pay cash up front.
Margin Financing Facilities ("Margin Value")
Margin value is the margin financing facility granted to you based the market value and the margin rate of each eligible stock in your Margin Account. As such, the Margin Value available for you is fluctuated and it is based on the value of "collaterals" you are holding.
You are free to use the margin financing facility granted to you. You can use the Margin Value to purchase any security listed on the 12 stock markets that BOOM offers for trading. In addition, it can be a source of funds for any other purpose.
Eligible Stocks for Margin Financing ("Eligible stocks")
All stocks listed in Hong Kong, AMEX, NYSE, NASDAQ, Japan, Singapore and Australia markets are eligible for margin financing ("eligible stocks"), except for warrants, suspended, illiquid and "penny" stocks.
Margin Lending Percentage (the "Margin Rate")
The margin lending percentage (the "margin rate") is ranged from 10%-50% of the market value of the eligible stock. The list of eligible stocks and respective margin rate are subject to change at the BOOM's discretion without prior notice.
Buying Power
Buying Power is the maximum value available to you for the purchase of any specific stock. It is calculated based on your Total Fund Available and the margin rate of that specific stock you intend to buy.
Credit limit of your Margin Account
Credit limit of your Margin Account is the maximum amount BOOM will lend to you. And the maximum is subject to change at BOOM's discretion.
Margin Interest Rate
BOOM will charge loan interest on the outstanding balance at HK prime plus 3 % p.a. or financing cost plus 3% p.a., whichever is higher, and the interest rate applied is subject to change from time to time. The loan interest rates ("debit interest rate") are shown in your daily / monthly activities statements.
Margin Loan Interest
Margin loan interest will only be charged on any outstanding amount on or after trade settlement date (e.g. settlement date for Hong Kong market is T+2, i.e. 2 days after "trade date"). It is calculated on such "due" balance on a daily basis and it will be deducted from your BOOM account on a monthly basis on the last day of the month.
Margin Call
When the amount you borrowed is higher than the margin value of your account, there will be a Margin Call. It is generally due to the fall of market price of your stock holdings. When the market value of any eligible stock in your holding decreases, the Margin Value of your account will be decreased accordingly.
Margin Risks
Securities bought on margin, like any other security, are subject to the risk associated with changes in market conditions. If, for instance, the stock price decreases, you might be subject to a margin call, requiring the deposit of additional funds or eligible stocks.
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