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.
Forex currency pair EUR/USD (EUR/USD.E.FX):
A client with €10,000 (Account Value) opens a €400 position in EUR/USD. The position is less than 5% of his total Account Value, therefore Leverage Rate of 2% is applied and 8€ is blocked as a margin (400*2%).
A client with €10,000 opens a €1,000 position in EUR/USD. The position in is more than 5% of his total Account Value, therefore Leverage Rate of 5% applies and €50 is blocked as a margin (1000*5%).
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.