IG Securities to Raise Margin Rates for Meme Stock CFDs

IG Securities, the Japanese arm of IG Group, a leading electronic trading company, has announced a raise in margin rates for CFDs tied to certain meme stocks. This move is in response to the recent high volatility in these stock prices.

IG Securities to Raise Margin RatesAbout the Hike

IG Securities, the Japanese subsidiary of IG Group, is increasing margin rates for CFDs on certain meme stocks due to recent price volatility. Effective May 15, 2024, at 9:00 pm (Tokyo time), the new maintenance margin rates will require traders to hold a larger margin amount for new and existing positions. This change aims to enhance risk management. 

Traders are advised to monitor their positions closely to avoid loss cuts due to insufficient margin. The “variation margin system” will also see adjustments, increasing maintenance margin rates based on the total number of positions. These memes stocks include:

– GameStop Corp (75%)

– AMC Entertainment Holdings Inc (50%)

– Clover Health Investments Corp (50%)

– Lemonade Inc (50%)

– Plug Power Inc (50%)

– Blackberry Ltd (50%)

– SunPower Corp (50%)

– Hertz Global Holdings Inc (50%)

– Tupperware Brands Corp (50%)

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What Does It Mean for Users?

Here is what this new change means for users of the platform. 

Increased Margin Requirements

The new maintenance margin rate will require traders to hold a larger margin amount for their positions. This increase aims to mitigate the risks associated with the recent volatility in meme stock prices.

Potential for Loss Cuts

With the updated margin rates, traders in the affected stocks must know that the latest maintenance margin rate will be applied. If the margin in your account is insufficient, your positions might be automatically closed to prevent further losses. It is essential to regularly check your account status and ensure you have enough margin to cover your positions.

Adjustments to the Variation Margin System

IG Securities also changes the “applicable margin rate” in the variation margin system. This system incrementally increases the maintenance margin rate based on the total number of positions held. Traders should familiarise themselves with these new rates and how they may impact their trading strategy. You can find detailed information on the trading platform.

Preparation for Market Conditions

Traders should be ready for the potential widening of spreads during certain market conditions. These include sudden market price changes due to natural disasters, decreased liquidity over weekends or at the start of the week, and the release of important economic indicators. Staying informed about these events and how they might affect the market can help traders manage their positions more effectively.

About IG Group

Founded in 1974 by British financier Stuart Wheeler as IG Index, IG Group introduced a revolutionary approach to trade gold prices without physical ownership via index. Over the years, IG Group has expanded its offerings to include leveraged and investment products, adapting to regional regulations with a diverse product lineup in different markets. IG Group Holdings plc has a robust global presence, including the United States, Europe, Australia, and more. 

Way Ahead

IG Securities aims to protect its clients and maintain stability by adjusting margin rates and enhancing risk management protocols. 

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