Concentration Rate indicates the rate of penalty applied for the concentration of certain positions. A Concentration Rate of 50% implies that if a position exceeds 50% of the total Account Value, that position is then considered Concentrated and the percent of funds blocked for the margin will increase to Concentration Rate value.
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Example |
Instrument RDS.B.NYSE: A client with Account Value of 10,000 USD opens position worth 12,000 USD. The position value x 75% is below his Account Value, therefore Leverage Rate of 20% applies and 2,400 USD is blocked as margin (12,000*20%). A client with Account Value of 10,000 USD opens 25,000 USD position in RDS.B.NYSE. The position in RDS.B.NYSE x Concentration Rate Long is higher than Account Value (25,000x75%=18,750>10,000), therefore Leverage Rate of 75% applies and 18,750 USD are blocked as margin for this exact position. Other positions will follow the same logic separately, total margin will be the sum of individual margins (normal or penalized, depending on each individual position size and penalty rate). |
Concentration Rates apply to the majority of Forex and stock/ETFs instruments. Concentration rates are also set for some futures and options underlyings. Leverage Rates as well as Concentration Rates are set by the Risk department on a case by case basis and can be changed at any time.
You can always check the Concentration rate in the ‘Instrument Info’ module on your desktop platform.
Concentration margin is a global setting and cannot be deactivated for specific accounts.