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On Implementation of Restrictions on Index Trading
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Abstract
The Japanese government amended laws and decrees on financial instruments trading of the Cabinet Office last year. According to the amended law, from January 1, 2011, if the margin a client entrusts with a dealer doesn’t reach 10%※1 or above of the turnover, the dealer cannot provide Index trading service to the client. The so called “10% or above of the turnover” means the upper limit of the leverage ratio becomes 10 times.
※1①Stock Index Derivative Trading：10％ of the turnover
②Stock Derivative Trading：20％ of the turnover
③Bond Derivative Trading：2% of the turnover
④Other Securities Derivative Trading：20％ of the turnover
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1、Scope of restriction object
The object of the restriction on margin trading is individuals that civilly enjoy rights and undertake obligations according to law .
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2、Restriction on corporate clients
Ⅰ corporate account (Margin Restriction)
Corporate Account (Margin Restriction) of corporate clients, also applies to the Act. However, for the 10% (we provide product ①）margin trading restrictions can apply for exemption. After exemption the corporate accounts trading conditions is same with the corporate account BULL (Margin Restriction exempted).
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Method
Download relevant documents from our homepage, fill out necessary items, send them to us by fax, mail or email.
See http://www.easthillfx.co.jp/fx/en/x7.htm
Ⅱ corporate account BULL (Margin Restriction exempted)
To apply for corporate account BULL (Margin Restriction exempted) , please applicate informaition from our website.
It applies to the leverage is higher than the Margin Restriction account, you may further increase price fluctuation risks.
Corporate Account BULL (Margin Restriction exempted) of Securities CFD trading conditions:
① remittances amount to be the first of 500,000 yen or more than 5,000US Dollar (Mini accounts: 50,000 yen or 500US Dollars)
② the necessary margin(Effectived From 12th Sep 2011 ):
3% of the Turnover,
③ auto Liquidation on the system see here
※ If the customer-specific financial institutions or investors, it would be prior consultation with the Company to change the above
terms and conditions.
※Please understand we may not be able to complete your application in your expected time due to formalities, so we hope you
can make sure you have plenty time for the application.
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3、Our response to the restriction on margin trading
Ⅰ①About opening a new position
ⅰTo open a new position when you hold no position in the Index trading account
You cannot open a new position when the effective margin is less than the necessary margin for opening a position  .
ⅱTo open a new position when you already hold a position in the Index trading account
You cannot open a new position when the variation margin is less than the necessary margin for opening a position .
②Once every trading day
At the time of close on each trading day, if the effective margin is less than the necessary margin for maintenance  , we will not ask for variation margin, but we will enforce you to close all or part of your positions.
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Necessary margin for opening a position : Turnover (Open price x Point value) x10% in case of opening a new position.
Necessary margin for maintenance at close : Turnover (Close price x Point value) x10% in case of maintaining a position.
Necessary margin for maintenance beyond close: Turnover (Market price x Point value) x10%
ⅡAuto liquidation
See http://www.easthillfx.co.jp/scfd/en/index3c.htm
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4、Notes about margin
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※Margin maintenance rate= Effective margin/Necessary margin
Please note: If you have some positions in several markets, after closing one of your position, the deposit maintenance
rate doesn't correspond to the actual rate.
※Maintenance rate of necessary margin for maintenance = Effective margin/ Necessary margin for maintenance
Effective margin: Margin balance plus/minus floating profit/loss, equal to the amount of net assets in the Index trading account.
Necessary margin: Necessary margin for opening a new position.
Necessary margin= Open price x Point value x10%
※At the time of close, the open price will change to the close price in the calculation of necessary margin for an existing
position, so after closeNecessary margin for an existing position= Close price x Point value x10%
Necessary margin for maintenance: Necessary margin for maintaining an existing position at the time of close.
Necessary margin for maintenance beyond close: Turnover (Market price x Point value) x10%
Necessary margin for maintenance at close: Turnover (Close price x Point value) x10%
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5、Calculation of margin trading
For example, when the effective margin is80,000 Japanese Yen, you sell 1 lot of NK1210 at 93650 in a mini account(USDJPY realtime rate83.50.), and the close price at close is 9450(USDJPY close rate84.50.):
①Effective margin when opening the position =80,000 Japanese Yen
②Necessary margin for opening a position = 9365×1dollar (mini account) x10%(margin restriction rate)×83.50×1(size)＝78,198 Japanese Yen
③close =80,000-(9450-9365)×1dollar (mini account) ×84.50=72,818 Japanese Yen
④Necessary margin for maintenance ＝9450×1dollar (mini account) x 10% (margin restriction rate)×84.50×1(size) ＝79,853Japanese Yen
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When the new position is set up, the effective margin (80,000 Japanese Yen) is more than the necessary margin for opening a position (78,198 Japanese Yen), so the position can be opened. However, the effective margin at close (72,818 Japanese Yen) is less than the necessary margin for maintenance (79,853 Japanese Yen), so the position will be forced to close.
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| ⅡIn case of hedge position |
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When you hold a short position and a long position of the product, the necessary margin for maintenance will be calculated based on the turnover of the short position or that of the long position, whichever is greater.
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For example: You buy 1 lot of NK1210at 9350 in a mini account and then sell 1 lot of NK1210 at 9550(USDJPY realtime rate83.50.)
①Turnover of the long position: 9350×1dollar (mini account)×83.50＝780,725 Japanese Yen
②Turnover of the short position: 9550×1dollar (mini account)×83.50 =797,425Japanese Yen
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Then, 797,425 Japanese Yen, turnover of the short position, will be the standard for calculation the necessary margin for maintenance. That is, the turnover is 797,425×5％×2＝79,743 Japanese Yen.
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6、Existing position and existing limit order
All accounts are within the scope of this implementation. Existing positions and existing limit orders before implementation are all object of the implementation.
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7、Date of implementation
Implemented from Dec 20, 2010.
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