Trading is permitted within a reasonable period of time, but no trading is permitted beyond a reasonable period of time, with the exception of risk-reducing transactions, until the client`s total net equity is restored to the original margin level. 3 “Recovery margins” refer to loans that exceed the initial margins. Margin calls must be made no later than one trading day after the date on which the customer`s total net equity falls below the maintenance margins. Assuming the margin call is made in U.S. dollars, the reasonable time frame is T+2, which is the case at the close of business on Wednesday. As of Thursday, the client is not allowed to participate in increasingly risky, risk-neutral or day-to-day transactions. The customer can only be allowed to take risks to reduce transactions. The following examples illustrate how margin calls are aged, reduced, and eliminated. Example 1 — Issuance of margin calls due to adverse market movements Margin calls may be reduced by the amount of margins actually received.
On Tuesday of Week 2, a cash deposit of JPY 10,000 was received, which removed the ongoing margin call of JPY 10,000. After that, the only margin call of 5,000 JPY is still within the reasonable period of T+3. Thus, during this period, Tuesday and Wednesday, all transactions are allowed. At the close of business on Wednesday, the client`s total net equity could not be brought back to the original margin level. On Thursday, money in the amount of JPY 3,000 was received, which reduced the margin call to JPY 2,000. Since the client`s account is always undervalued beyond the reasonable period of time with a margin call of JPY 2,000, the client can only conclude risk-reducing trades on Thursday and Friday. * Since total net equity is zero, no payments can be made. {$-0- − [($7,000 − $9,000), which = 0]}. The only margin asset in the customer account is the long option value, which cannot be used for an excess margin payment. Example 4 — Impact on margin calls due to favorable market movements below the current total margin call On Friday, a cash deposit of $5,000 was received to remove the margin call. Once the client`s total net equity is restored to the original margin level, all trading activities will be permitted. Note: If the net value of the option is greater than the initial margin risk component when calculated, the maximum amount of excess margin available for payment is equal to total net equity.
Margin calls cannot be reduced/eliminated if the liquidation does not restore the customer`s total net equity to or above the original margin. Example 2 — Effects on margin calls due to the liquidation of positions Example 1 — Sub-margin beyond a reasonable period of time — Suppression of margin calls Calculation of the service margin of clearing members in relation to a single account. . 3 Calculation of the margins required of clearing members for novated contracts that are not marginalizable futures contracts. 2 “Options Agreement” means any contract that grants an option over a basic or forward contract. * A payment for excess margins can be made from the $3,200 customer account {$5,000 − [($3,000 − $1,200) = $1,800]}. . Suppose client A/C A and client A/C B belong to the same client.
. * All trading activities ** Only risk-reducing transactions 1 “Futures contract” refers to any contract on an underlying asset, which is referred to by the exchange as a futures contract. If Customer A/C A and Customer A/C B are not combined, the amount of excess margins available for withdrawal, i.e. $30,000, is greater than what is actually available to the customer as a whole. 5. Collective accounts and other margin policies (Rule 7.22.1). . . .
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