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Margin Trading & Important Trading Dates
Key Definitions
First Notice Day refers to the first date where notices of intention to deliver actual commodities against futures are authorised. This date varies by commodity and exchange. If you are holding a long futures position, you will need to liquidate or roll over the long position prior to the First Notice Date.
Last Trading Day refers to the final day when trading can take place in a particular futures delivery month. This is again according to the rules set by the exchange. Futures contracts that remain outstanding at the end of the last trading day must be settled by delivery. If you are holding a short futures position, you will need to liquidate/rollover the short position by the last trade date to avoid physical delivery.
A margin in the Futures/Forex market is the amount you would have to deposit to take up a trading position. The amount is usually a fraction of the underlying asset value, and it helps ensure that both parties fulfil their obligations. Both buyers and sellers must put up margin payments.
Trading with margin creates a leveraged effect that allows you to use a small amount of capital to make an investment of greater value. Therefore, a small price change can result in larger profits or losses.
Maintenance margin is the minimum amount that your account must maintain after initiating your position/s. A margin call will occur when your equity falls below this maintenance margin when your position is held overnight. Click here to learn more about a margin call.
If you are an existing customer, you can view the latest margin list from Client Portal under Trading Information.
Alternatively, you may call or WhatsApp the Client Service Desk at (65) 6538 0500 or email futures@phillip.com.sg to enquire about the margin requirements.
A margin call occurs when the equity in your account is insufficient to cover the full initial margin (IM) required for the open position(s) held overnight. A margin call is determined at the close of the business day and the margin call amount is the difference between the remaining equity and the required initial margins imposed.
Phillip Futures practises a 2-day margin call policy. The amount for Day 1 call is determined solely on difference between the equity and the required IM. Should the account continue into a Day 2 call, then the margin call amount for Day 2 will be the higher shortfall between Day 1 and Day 2 (last day).
Your account may be restricted to only liquidation trades on the last day of the call.
How to fulfil the margin call?
To fulfil your margin call obligation, you may deposit the full margin call amount. Alternatively, you can reduce your positions and to ensure that your equity balance is above the IM at the close of the business day.
What happens if I do not fulfil my margin call?
Your position(s) will be liquidated/reduced at the close of the specific contract held in the account. Phillip Futures reserves the right to restrict the trading activities in your account until the opening of the next business day.
Generally, the equation is (Equity/ Initial Margin) x 100 = Remaining Equity in %).
This shows how much equity you have as a percentage of the Initial Margin required in your account.
Margin Call
A margin call is when the Equity Balance falls below the Maintanence Margin for the overnight positions.
Margin call amount is the difference between the equity balance and the Initial margin. Equity balance is the sum of your cash & collateral, and the floating profit & loss determined by mark-to-market (MTM) of your open positions.
Our general policy is 2 Days. Customers are required to fully extinguish the margin call by a stipulated cut off time on Day 2.
You are to only perform risk reducing activites when on Margin call. There shoud not be risk increasing positions if funds are not forth coming to fulfil the call.
On Day 2, trading access may be restricted for only liquidation purposes.
Margin call amount is based on the highest of the margin call days.
Assuming that:
– On Tuesday, you are on a Day 1 Margin Call for $10,000.
– By end of Tuesday, market is in your favor of $5,000.
– On Wednesday, you will be on Day 2 Margin Call for $10,000 (the higher Margin Call amount). Action must be taken by the stipulated cut off time on Day 2.
To fulfil your margin call immediately, you may deposit the full margin call amount. Do notify Phillip Futures via email to pfpl_risk@phillip.com.sg with proof of transaction.
Please see here for deposit instructions.
Alternatively, you can reduce your positions and to ensure that your equity balance is above the Initial Margin before the stipulated cut off time . Please note that it is only after mark-to-market to ascertain if account is fully out of margin call.
On Day 2, your position(s) will be liquidated/reduced to meet the call at the stipulated cut off time. Your trading access may be restricted until the opening of the next business day.
Click here for more information regarding Force Liquidation.
As long as the equity balance remains below Initial Margin even with liquidation and favourable market movements by the stipulated cut off time, you will still be subjected to force liquidation to fulfill the margin call.
The account is not out of call with partial top-up, and will still be subjected to force liquidation if the equity balance remains below Initial Margin by the stipulated cut off time.
By topping up the full margin call amount.
Click here to view the various ways you can fund your account.
The stipulated cut off time will be in the margin call notification email to you.
A simple rule of thumb will be 15 to 30 mins before the contract close, though not all contracts are equal.
Controlled currencies cannot be used margin requirement on contracts which are not denominated in these controlled currencies.
Examples of controlled currencies (non-exhaustive) are: MYR, THB, WON, CNH, IDR, INR, TWD, PHP & VND. Please call or WhatsApp the Client Service desk at (65) 6538 0500 or email futures@phillip.com.sg, if unsure.
You can refer to FAQ on Funds Deposit & Withdrawal for more details on how you can proceed to top-up your account.
Even though that contract is closed for trading, it is still considered as a business day if other contracts in the same exchange are opened for trading. Hence, you are required to fulfill the Margin Call by topping up your account.
There maybe a wide time lapse between the cessation time of the contract expiry and its final settlement time. Hence, liquidation may take place on a Margin Call account on these contracts anytime in the last hour prior to contract cessation should the account still be on a margin deficit. Do top-up the account if you intent to hold the contract to cash settlement.
Please refer to FAQ on Force Liquidation.
Affected contracts:
SGX Nikkei 225 Index Futures
CME Mini Crude & Brent Crude Financial
IPE Brent, IFSG mini Brent and IFSG mini WTI.
Low Equity Policy
An account is considered to be at low equity whenever the equity balance falls belo 50%* of the initial margin (IM) of the open position(s) held in the account.
Forced liquidation, on a best effort basis, can take place when the equity reaches 20% of the initial margin. While not obligated, we will do our best to notify you of the low equity status when it occurs.
We will do our best to inform you when the account falls into low equity, and will proceed to force liquidate the What happens when my account fall into low equity? position/s if equity reaches 20% of IM.
Informing of customers during low equity and force liquidations are carried out on best effort basis. There may be circumstances that could hamper these actions. Customers are reminded not to rely on our force liquidation as a form of your own risk management measure.
*Phillip Futures reserves the right to amend the low equity and stop loss threshold in accordance to the risk profile of the account margin.
Generally, the equation is (Equity/ Initial Margin) x 100 = Remaining Equity in %.
This shows how much equity you have as a percentage of the Initial Margin required in your account.
To prevent any Forced Liquidation, please top-up your account or reduce your position(s) such that the remaining equity meets or exceeds the required initial margins. The account can be at low equity again if the equity continue to fall below 50% despite the earlier top up.
Refer to Force liquidation FAQ
Deposits made to Phillip Futures are not immediately received and instructions to liquidate in part or all of your positions may still arise before your funds are credited into your account. To avoid forced liquidation of positions, your deposits must be cleared and booked into your account/trading platform. Please note that liquidation instructions are irrevocable, even though we may be in the process of receiving your funds or crediting them into your account/trading platform.
Please click here to see funds deposit instructions.
After topping up your account, do send attachments of remittance proof (screenshots) to Phillip Futures via pfpl_risk@phillip.com.sg.
Weekend Risk Policy
The Weekend Risk Management and Exchange Holiday Policy was introduced in March 2020. This policy is to safeguard accounts from drastic market gaps in the next session opening.
Under this policy, customers are required to have at least 80% of IM in the equity to carry their positions over the weekends or during the relevant Exchange Holidays.
Policy does not apply to CFD/FX trading on MT5.
It can be maintained by either topping up the equity, or to bring down the Initial margins level by reducing your positions.
Generally, the equation is (Equity/ Initial Margin) x 100 = Remaining Equity in %.
This shows how much equity you have as a percentage of the Initial Margin required in your account.
The policy is applied on:
1. every Friday
2. eves of exchange holidays of the relevant contract.
Click here to learn more about the various ways you can fund your account.
After topping up your account, do send attachments of remittance proof (screenshots) to pfpl_risk@phillip.com.sg for verification and consideration. Please follow up with a call to the Risk Management Team at 6531 1688, if you do not receive acknowledgement for your email, this helps to ensure that we are updated of your incoming funds to avoid liquidation of your positions.
Force liquidation will be carried out on accounts below 80% to bring this percentage to above 80%.
Force liquidation is done at best effort basis, please refer our Force Liquidation policy here.
Final Notice Day/Last Notice Day
Physically deliverable futures have to be liquidated one day prior to FND (First Notice Day) and/or LTD (Last Trading Day). However, there are some contracts which require earlier liquidation[i]. This is to avoid the risk of illiquidity as contracts nears expiry.
The day a contract has to be liquidated is known as its Liquidation Day. On Liquidation Day, expiring positions have to be liquidated or rolled no later than 11pm Singapore time or 30 minutes prior to the close, whichever is earlier.
Please contact the Futures Dealing Desk at (65) 6535 1155/ (65) 6536 7633 if you require any further clarifications on liquidating your open position to avoid physical delivery.
[i] Including but not limited to NYMEX WTI Crude Oil futures (CL) and exchanges such as APEX, BURSA, DCE, HKEX, INE, JPX and ZCE.
We encourage you to liquidate your position for your physical deliverable contract at least two days prior to FND for long positions and at least two days prior to LTD for short positions. This is to mitigate the risk of thin liquidity. Phillip Futures will assist to liquidate all open positions that are not squared one day prior to the FND/LTD.
However, please note that the liquidation day may vary due to the nature of product, exchange requirements or holidays. Please contact the Futures Dealing Desk at (65) 6535 1155 or Commodities Dealing Desk at (65) 6576 9810 to check on the actual liquidation day for the contract you are trading in, or look out for the notification email sent to you when the contracts are nearing expiry.
Please refer to the trading calendar for the FND/LTD of futures contract(s) that you have open positions in. You are strongly encouraged to monitor your positions so that you are aware of the FND/LTD of the respective future contracts in your portfolio.
First reminder email
5 business days prior to the FND/LTD, you will be sent a reminder email.
Second reminder email
2 business days prior to the FND/LTD, you will be sent the second and final reminder email.
In these emails, you will be reminded to liquidate or roll over your positions before the ‘30 minutes period’ prior to market closing time on the FND/LTD.
You will be clearly informed about the consequences of failing to do so i.e. Phillip Futures will attempt to liquidate your positions within the last ’30 minutes period’ prior to market closing time in order to avoid physical delivery.
To avoid physical delivery
The vast majority of physical deliverable futures contracts are traded by hedgers or speculators with no interest in taking or delivering the underlying asset. Most traders simply close out the positions by purchasing offsetting contracts to avoid the risk of physical delivery.
To avoid thinning liquidity
Towards the last day of trading, physically-settled contracts will typically experience thin liquidity. This is due to the fact that traders who do not intend to convert their futures contracts to physical goods would have already exited the market either by rolling over their positions to the next delivery month or simply closing out their positions to avoid physical delivery. Naturally, such actions by traders who hold larger positions would have more significant impact on price movements and markets are therefore subject to more intense volatility as the futures contracts head towards expiration.
Please approach our Marketing Desk at the Main Office or Investor Centres during operating hours for more information on the First Notice and Last Trading Day.
You can also contact the Marketing Desk at (65) 6538 0500 or email futures@phillip.com.sg.
Forced Liquidations
Various methods can be employed for liquidations, including hedging or pricing from similar products if warranted. During the liquidation process, your trading system may be disabled. Slippages leading to deficits to your account may also occur during liquidations, these are risks inherent in leveraged trading and clients are to make good the shortfall should these deficits (overlosses) arise.
All actions are carried out on our best effort, in times of unforeseen market events and conditions, liquidations process may also be hampered. As such, customers are reminded to maintain sufficient margins for positions at all times and also not to rely on force liquidations as a way for risk management measure.
*Phillip Futures reserves the right to amend the low equity and stop loss threshold in accordance to the risk profile of the account.
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