Margin_Policy

Margin Policy

Intraday margin is for intraday trading only and is set by your Futures Commission Merchant. Overnight margin is for holding positions into the close or for several days at a time and is set by the exchange of the products you are trading.

Anytime a customer uses intraday margin and holds a position into the close of a futures market, the account immediately becomes subject to the exchanges overnight margin policies for that product as set by the exchange that product is traded on. Exchange margins can be as much as 800% greater than the margin that is allowed by many Futures Commission Merchants for intraday trading.

If a customer chooses to hold positions overnight and uses intraday margin to do so, then his positions may be subject to immediate liquidation at, on or after the close of that exchange for the day. If a customer account is noted to have a pattern of holding the maximum position intraday into the close each day, then that account may be reviewed and set to use only a percentage of it’s available credit to trade. This percentage can vary from 50% to 90% based on the pattern of trading and the type of customer relationship.

If your account has been reviewed and set to a percentage of your available credit and you wish to have your account re- reviewed in order to increase your available credit, then you may submit an email to operations@velocityfutures.com asking for another review. Your account must have shown at least 2 months worth of trading with exchange overnight margins being observed in order to be considered for re-review.

HIGH RISK ACCOUNTS

If your account has been under supervision and has demonstrated any of the following patterns of behavior your account may be classified as a HIGH RISK ACCOUNT:

Trading at max position allowable for your account all the time.
Leaving a debit in your account for more than 5 days.
Having more leverage on than your equity balance allows if you have sustained a big loss for the day.
If your account is labeled as a HIGH RISK account then you will be subject to additional margin for intra-day trading up to 20- 150% per contract of the published intra-day rate. This additional margin is to allow for the RISK desk to properly protect the firm in the event of a sustained move of the product you trade against you at maximum margin. In addition if you are holding positions overnight or past the close your positions will be trimmed or partially liquidated to bring your exposure down automatically by RISK personnel. This is calculated as 200% margin for liquidation and is one half of the overnight requirement. In addition, RISK personnel may impose overnight margins on your account for liquidation if you have a pattern of holding overnight positions and not meeting your margin calls. An Example of this would be getting a margin call on T+1 and having the same call unmet on T+2. If you have any questions please contact operations to explain the math and policies to you so that it does not come to you as a surprise while you are trading.

Exchange margins are to be in place and observed by all participants in the futures markets. Please read and observe all posted information about the futures products that you trade and be aware of the intraday margin requirements as well as the exchange overnight margin requirements at all times.

MANAGED ACCOUNTS WITH ALLOCATION

If you are a manager and are trading with an allocation, special margin privileges will apply. Your trading size will be limited by the smallest account that you are trading inside of your allocation. What this means is that if you are attempting to allocate buying power from a larger account in your allocation to a smaller account in your allocation, the reverse will occur. You will be limited by the total maximum quantity that you place in the smallest account. So plan accordingly and make sure that your allocation sizes will fit within the standard margin requirements for all of your accounts. And remember that when changing an allocation or adding or subtracting an account from an allocation you must be flat.

MANAGED ACCOUNTS NO ALLOCATION

If you are a manager and you are managing via a trading authorization on multiple accounts and you wish to execute for all of your clients independently, you will be limited by the total amount of deposit that you have in your firms account or the smallest trading account balance that you are managing whichever is higher. What this means is that you cannot manage a small account and have the buying power from a larger account used for the smaller account at any time.

Thank you.
Velocity Risk Management

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