Longbridge Ace Account
Longbridge Ace Account is a trading account that gives you the flexibility to manage your portfolio and allows you to trade with leverage when you need it. Your investment power can be increased through margin financing based on the asset size in your trading account.
The default credit limit in your account is zero. However, you may apply for adjustment by through the Longbridge App > "Portfolio" > tap on "Assets" > "Financing Status".
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Terminology
Initial Margin (IM): The amount of margin required to open a new position.
Maintenance Margin (MM): The amount of margin required to hold the position.
Force-selling Margin (FM): The minimum amount of margin required to prevent immediate force-selling.
IM/MM/FM Requirement = Sum (Quantity x Market Price of Individual Investment Product x relevant Margin Factor)
Equity Balance = Cash Balance + Total Market Value of Investment Portfolio - Restricted (Frozen) Cash
Available Cash
Available Cash (including financing) = Equity Balance - IM Requirement
Maximum Available to Purchase = Available Cash / Initial Margin (IM)
The debit balance in the account is strictly lower than the credit limit.
For example:
A client deposits $10,000 in cash and purchases shares with an IM factor of 30%. The account’s credit limit is $20,000.
Maximum purchasing power = $10,000 / 30% = $33,333
Since the client’s account has a credit limit of $20,000, the client is only allowed to purchase up $30,000 of shares ($10,000 on cash and $20,000 on financing).
Margin Call (MC)
Margin Call is triggered when there is a maintenance margin deficit, i.e. when Equity Balance < Maintenance Margin Requirement. The client is required to satisfy the margin call within 3 market days, including the date of the notice.
The issued margin call will be slightly higher than the difference between the maintenance margin and equity balance to serve as a buffer for price volatility.
Example for margin call:
A client deposits $10,000 in cash & $5,000 of A shares (IM: 30%, MM: 25%) and purchases $25,000 of B shares (IM: 50%, MM:45%). Suppose the market value of stock B falls to $19,500.
After the client buys the stock and the market value of stock B falls, the client's position is as follows.
| Debit Balance | SGD 15,000 (SGD 10,000 - SGD 25,000) |
| Total Market Value of Investment Portfolio | SGD 24,500 (SGD 5,000 + SGD 19,500) |
| Equity Balance | SGD 9,500 |
| Initial Margin | SGD 11,250 (SGD 5,000 X 30% + SGD 19,500 X 50%) |
| Maintenance Margin | SGD 10,025 (SGD 5,000 X 25% + SGD 19,500 X 45%) |
| Margin Call | SGD 1,015 (The difference between maintenance margin and equity balance is SGD 525) |
The client needs to ensure that the equity balance in their account satisfies the margin requirement on or prior to the specified date.
If the client chooses to sell securities, the market value of securities to be sold needs to be at least equal to the margin call amount divided by initial margin ratio (IM Ratio)
When the equity balance is lower than the force-selling margin, the client needs to immediately top up the margin deficit amount or sell down the positions, otherwise, force liquidation might be enforced.
Note: Please contact customer service if you need any clarification or assistance on the mechanics of margin trading.
Settlement of Trades
The account carries out settlements in the traded currency.
Settlement of Purchase Contracts: Purchase contracts will be settled on the contract's due date.
Settlement of Sale Contracts: Settlement of sale contracts will be carried out upon fulfillment of delivery obligations.
Online Transaction Records and Account Statement
A monthly statement of account will be provided as long as there are transactions or asset balance in that month.
Funding
Please refer to the withdrawal and deposit guidelines in the Longbridge App for more details.