Margin Call Policies
Cleartrade Commodities Margin Call Policies
What is a margin call?
A margin call in commodities means the value of positions in your account exceeds the current available equity in your account.
COMMODITY MARGIN REQUIREMENT.
What are our margin call policies?
It is your responsibility to be aware of the margin requirements for your trades, and to keep your account fully margined at all times. Please refer to the current margins of futures contracts for the latest margin requirements.
Generally, if you are on margin call, we will notify you by phone and will request immediate action from you, however we are not required to notify you in advance of any liquidation. Therefore, depending on market conditions and the extent of the margin requirements, we may liquidate your positions at the market without further notice to you. Also, be advised that margins are subject to change without further notice.
Trading futures, options and spot foreign currencies is a challenging and potentially profitable opportunity for disciplined and experienced investors. However, before deciding to participate in the futures markets, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose. Futures' trading via the Internet entails substantial risk, including, but not limited to, system failures, market volatility and illiquidity, and the possibility of changing political and/or economic conditions that may substantially affect market prices.
An enticing aspect of trading futures and currencies is the high degree of leverage available. The leveraged nature of futures trading means that any market movement will have a disproportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and be required to deposit additional funds to maintain your position. If your account is under margined -- or if we become insecure at any time with respect to the adequacy of the collateral on deposit in your account -- we reserve the right, at any time and without prior notice, to cancel any or all outstanding orders and offset any or all open positions in your account. You are liable for any deficiency or debit balance which might result.
Now is a great time to be a futures trader. Technology has put tools and information never available before right at your fingertips. Internet-based trading gives you unprecedented speed, convenience, and control. And perhaps best of all, online technology provides unbeatable value to the individual trader. We're proud to be leading this revolution in the futures markets.
While the advantages of Internet trading through ClearTrade are tremendous, it's important that you understand that having complete control over your trading account is hard work, and it can be time-consuming. It means educating yourself about financial principles and the economy. It requires staying on top of the news and monitoring your account conscientiously. And most of all, it means educating yourself about the futures markets. If you don't fully understand these basics -- or if you don't have the time or inclination to keep up with the markets and to monitor your account regularly -- or if you're just not comfortable having total control of your account -- then online trading probably isn't for you. Working with a Full Service or Broker Assisted ClearTrade account executive -- who can offer you one-on-one, personal guidance, mentoring, and assistance -- is probably a better idea.
Remember, ClearTrade self-directed on-line trading has been designed to serve experienced, self-directed traders who don't need the assistance of a full-service or Broker Assisted broker, so we don't provide tax, legal, or accounting advice. While we do place substantial tools and information at your fingertips, being a self-directed trader means that you're calling your own shots, and you're fully responsible for your trading decisions and actions.
How do I cover margin calls?
If you want to cover the call, you will need to wire funds without delay to our bank. Funds must reach us before 11:00 am (CST) the same day. If we cannot reach you that morning, or if you fail to meet your call, we may liquidate your positions at our discretion, as deemed necessary. Please read our Wiring Instructions.
If you want to liquidate some of your positions, you must liquidate enough to completely remove the margin call status before 11:00 am (CST) the same day. If we cannot reach you that morning, or if you fail to meet your call, we may liquidate your positions at our discretion, as deemed necessary.
In Delivery Situations
If you want to take delivery, adequate funds for the purchase must be in your account three days before first notice day. If funds are not present and we cannot contact you, we will liquidate your positions before first notice day.
You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account.
The firm can force the sale of securities in your account. If the equity in your account falls below the maintenance margin requirements under the law, or the firm’s higher "house" requirements, the firm can sell the securities in your account to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.
The firm can sell your securities without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
You are not entitled to choose which security in your margin account is liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.
The firm can increase its "house" maintenance margin requirements at any time and is not required to provide you with advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account.
You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.