Guide to Longbridge Integrated Account

The Longbridge integrated account is a trading account that allows you to flexibly manage your investments and trade with leverage when you need it. You can choose to increase your investment buying power through margin financing by placing designated securities in your account as collateral.

The financing limit of the account will be automatically evaluated based on the cash you deposit or the transfer situation. If you need to adjust, please login to the Longbridge App > Assets > Financing Status for application, or contact your account manager.

1. Margin

• Initial margin (IM): The margin required to be deposited when opening a position
• Maintenance margin (MM): The level of equity assets to be maintained
• Freed-up margin (FM): When equity assets fall below this level, positions may be forced to liquidate immediately
• IM/MM/FM requirement = Sum (Market value of individual investment products × Corresponding margin factor)

2. Margin Requirements

Equity assets = Cash balance (ledger) + Total portfolio market value

Available funds

• Available funds (including financing) = Equity assets - Initial margin requirements - Suspended funds
• Maximum buying power = Available funds / Initial margin (IM)

The balance owed shall not exceed the financing limit.

Example:

You deposited USD 10,000 in cash and purchased shares with an initial margin factor (IM ratio) of 30%, and the account financing limit is USD 20,000

Maximum buying power = USD 10,000 / 30% = USD 33,333

Assuming that the account financing limit is USD 20,000, the account can only actually purchase a maximum of USD 30,000 of the stock (USD 10,000 in cash and USD 20,000 in financing).

Margin call

The margin call will be higher than the difference between the maintenance margin and equity assets.

When equity assets fall below the maintenance level, the company will issue a margin call. You shall pay the margin call difference within 3 trading days of receiving the notice (including the day of receipt of the notice).

Example: margin call case

You deposited USD 10,000 in cash and USD 5,000 worth of Class A shares (IM: 30%, MM: 25%) and purchased USD 25,000 worth of Class B shares (IM: 50%, MM: 45%). Assume that the market value of B stock falls to USD 19,500.

After you purchased the stock, and after the market value of B stock fell, your hold position was as follows.

You are required to bring the equity assets in his account up to margin requirements on or before a specified date.

If you choose to sell securities, the market value required to be sold shall not exceed the difference between the initial margin and equity assets / initial margin ratio (IM ratio).

When the equity assets are lower than the forced liquidation margin, the difference in the margin call shall be paid off immediately, otherwise the position may be forced to liquidate immediately.

The actual amount of margin call may be higher, depending on the nature of the stock and company policies.

3. Balance fund management service

You can choose to join the Cash Plus management service, which is an idle fund financial product launched by Long Bridge HK Limited. It provides cash value-added services, meeting your needs for stock purchasing at any time while generating returns on idle funds. After joining, your excess HKD and USD funds will be used to invest in money market funds as appropriate.

For details, please refer to the section about Cash Plus in Longbridge App for more information.

4. Transaction settlement

The Longbridge integrated account will be settled in the transaction currency.

• Buy contract settlement: Buy contracts will be settled on the contract expiration date.
• Sell contract settlement: Sell contract settlement will be made after the delivery obligation is fulfilled.

5. Online transaction records and statements

As long as there are transactions during the month, a detailed monthly account statement will be provided at the end of the month.

6. Transfer and remittance

For details, please refer to the withdrawal and deposit guidelines in the Longbridge App.

Key Takeaways:

• Margin system:
  • Initial margin (IM): Minimum requirements for opening a position
  • Maintenance margin (MM): Position warning line
  • Freed-up margin (FM): Forced liquidation threshold
  • Calculation equation: Equity assets = Cash balance (ledger) + Total portfolio market value
• Lever control:
  • Available funds (including financing) = Equity assets - Initial margin requirements - Suspended funds
  • Maximum buying power = Available funds / Initial margin (IM)
• Risk control process:
  • When the equity assets are less than MM, the difference shall be made up within 3 trading days
  • When the equity assets are less than FM, the immediate liquidation is possible
• Value-added service: Cash Plus automatically invests in money market funds to increase the income of idle funds

Disclosure

This article is for reference only and does not constitute any investment advice.