Currency Margin Calculation (Withdrawals)

Overview: 

The following provides an example of how currency margins are calculated when determining the funds available for withdrawal.

Margin for Withdrawal Example

In the following example, assume the base currency for the account is USD and the net asset value positions (the sum of the values of all stock, cash, option, etc positions in each currency) are as follows:

  • USD 50,000
  • EUR 30,000
  • CHF -39,000
  • MXN -100,000
  1. Determine the net asset value (net liquidation value) for each currency. In this example, this is shown in columns 1 and 2 of the example table.
  2. Convert all non-base currency positions to base currency using prevailing market rates between the asset currency and base currency, here, USD. (column 3). This result is shown in column 4.
  3. Apply the margin rate for each currency (column 5).
  4. Calculate the margin in base currency as the net asset value from each original currency converted to USD multiplied by the margin for that currency (column 4 times column 5). The result is shown in column 6.
  5. The total margin requirement is the sum of each currency sourced margin requirement. In our example, the total margin requirement in base currency, USD, is $2,126. As the total net liquidating value expressed in USD is $46,476, the available funds is the difference, $44,350.

 

1
2
3
4
5
6
Currency
Net Asset Value (local currency)
Currency Rate
Net Asset Value
(converted to base currency, USD)
Margin Rate
Margin Requirement
(in base currency, USD)
USD 50,000 1.0000 USD/USD 50,000 0% 0.00
EUR 30,000 1.2000 USD/EUR 36,000 2.5% 900
CHF -39,000 1.3000 CHF/USD -30,000 2.5% 750
MXN -100,000 10.500 MXN/USD -9,524 5% 476
TOTAL     US $ 46,476   US $2,126
Available Funds     US $ 44,350    

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