Margin collected... on working orders?!

[xnox]

I am using demo spread betting account and I have opened a bunch of limit/stop working orders against FTSE100 futures contract.

I have set them to be good until end of week, and they are within +/- 500pts of the current trading level.

Despite none of them triggered, my balance overview already shows "Margin incurred" which to me seems odd, given that the working orders have not be executed yet. Conceivably, if one order out 100 is executed I can end up in margin call situation - what will happen then? Will IG be closing open position or cancelling working orders? Is it normal for margin to be charged on working orders?

[SimonC]

Hi 

 

Thanks for your question.

 

Yes, it is normal for margin to be used on working orders. This is due to the fact that if the order gets filled, you will need this cash available to cover the margin. If you have open positions and working orders, all using up margin, and end up into a margin call, then our standard procedure would be to delete the working orders first, in an attempt to release funds without needing to adjust any live positions.

 

If we did not apply any margin to the working order, it would be possible to then use up all available funds in your account on open positions, whilst also having working orders waiting to be filled. If you then get filled on the working orders this could then put your account straight into a margin call situation, and as you open new positions with the working order, your other positions get closed off due to the margin call.

 

In order to avoid this situation, by using funds as margin for working orders, you know what your true available funds figure is, taking into account any potential order fills.

 

I hope this explains things and if you have any further questions please get in touch.

 

Regards,

 

Simon