Calculating spread betting margins
In order to open a position on your account, you will need to deposit an amount of money known as margin. The margin you will be required to deposit reflects a percentage of the full value of the position you wish to open. On our platform this is referred to as 'position margin'.
The position margin will be calculated using the applicable margin rates, as shown in the product library in the platform.
For certain products, different margin rates may apply depending on the size of your position in that product or the tier of your position (or a portion of your position) in that product.
The portion of the position that falls within each tier is subject to the margin rate applicable to that tier.
In order to calculate the position margin, the level 1 mid-price (shown on the platform) is used.
For example, position margin is calculated as follows:
Company ABC (GBP) margin rates
| Tier | Position size (stake) | Margin rate |
|---|---|---|
| 1 | 1-10 | 10% |
| 2 | 11-30 | 15% |
| 3 | 31-50 | 20% |
| 4 | 51-100 | 30% |
| 5 | Above 100 | 50% |
For example:
Based on the margin rates in the table below for Company ABC (GBP), if a position of £65 per point used the level 1 mid-price of 275.0, the margin would be £3437.50.
Your position margin requirement is calculated as follows: 12.5 x 275.0 x 1 = £ 3437.50
| Tier | Position size | Margin rate | |
|---|---|---|---|
| 1 | 10 | 10% | 10 x 10% = 1 |
| 2 | 20 | 15% | 20 x 15% = 3 |
| 3 | 20 | 20% | 20 x 20% = 4 |
| 4 | 15 | 30% | 15 x 30% = 4.5 |
| 5 | 0 | 50% | 0 |
| Total | 65 | Total = 12.5 |
The notional value of your total position is £17,875.00
Spread betting using margin allows you to open a position by only depositing a percentage of the full value of the position. This means that your losses will be amplified and you could lose more than your deposit. Profits and losses are relative to the full value of your position. Spread betting using margin is not necessarily for everyone and you should ensure you understand the risks involved and if necessary seek independent professional advice before placing any spread bets.