Margin Calls

A margin call will in most situations be when more variation margin needs to be deposited. For example, if a client buys £5 of the FTSE and the market moves 300 points lower the accrued mark to market losses will have been withdrawn from the account as the index moves lower. But if the client does not have enough money to fund this position then a margin call will be placed for more money to be deposited into the account. A margin call cannot be paid out of the initial or deposit margin, it has to be free cash.

The client then has two choices and only two;

1. Deposit more money

2. Reduce or liquidate the trade

Remember Spread Bets are dealt on margin therefore it's possible to lose far more money than is in one's account. In situations like this comments like 'I'll send a cheque' or 'wait a few more days and I'll settle up with you at the end of the week' just won't cut it. For 99% of spread betting clients money owed must be paid in by close of business.