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Margin Trading & Important Trading Dates
Key Definitions
First Notice Day refers to the first date where notices of intention to deliver the actual commodities against futures are authorised. This date varies by commodity and exchange. If you are holding a long futures position, you will need to liquidate or roll over the long position prior to the First Notice Date.
Cash-settled contracts do not have a First Notice Day.
Last Trading Day refers to the final day when trading can take place in a particular futures contract as determined by the Exchange. Futures contracts that remain outstanding at the end of the Last Trading Day will be settled via physical delivery of the underlying asset or cash settlement against the Final Settlement Price. For deliverable futures, all positions will have to be liquidated or rolled over prior to the Last Trading Day to avoid physical delivery.
A margin in the Futures/Forex market is the amount you would have to deposit to take up a trading position. The amount is usually a fraction of the underlying asset value, and it helps ensure that both parties fulfil their obligations. Both buyers and sellers must put up margin payments.
Trading with margin creates a leveraged effect that allows you to use a small amount of capital to make an investment of greater value. Therefore, a small price change can result in larger profits or losses.
Maintenance Margin is the minimum amount that your account must maintain after initiating your position/s. A margin call will occur when your equity falls below this maintenance margin when your position is held overnight.
See below FAQ “What is a Margin Call?” to learn more.
If you are an existing customer, you can view the latest margin list from Client Portal under Trading Information.
Alternatively, you may call or WhatsApp the Client Service Desk at (65) 6538 0500 or email nova@phillip.com.sg to enquire about the margin requirements.
Generally, the equation is (Equity/ Initial Margin) x 100 = Remaining Equity in %.
This shows how much equity you have as a percentage of the Initial Margin required in your account.
Margin Call
A margin call takes place when your account Equity drops below the Maintenance Margin required to support your overnight open positions. This situation indicates that your account no longer meets the necessary margin requirements to maintain these positions. Phillip Nova monitors margin requirements and determines whether a margin call is necessary at the end of each business day. If your Equity is insufficient at this time, you will be notified of the margin call and required to take action to restore your account to compliance.
The margin call amount is calculated as the difference between your Equity and the Initial Margin Required. This figure represents the shortfall that must be addressed to satisfy margin requirements for your account.
Equity is comprised of several components:
- Cash
- Non-Cash Collateral (The amount and type of collateral accepted may vary depending on your account type)
- Net Securities Collateral
- Profit and Loss (P&L) based on the mark-to-market (MTM) value of open positions
It is important to note that the value of collaterals included in your Equity will differ according to the specific type of account you hold.
Typically, margin calls must be addressed within two business days. This means that customers are required to resolve the margin call by topping up their account or reducing positions to meet the margin requirements by the specified cut-off time on the second day.
Failure to fulfill the margin call within this period may result in restricted trading access and the potential liquidation of positions to cover the shortfall.
To minimize the risk of margin call liquidation and maintain the health of your trading account, it is important to take proactive steps:
- Monitor Your Equity and Margin Requirements: Regularly review your equity balance and the margin requirements for your open positions. Staying informed about your financial standing and obligations helps you respond quickly to changes in account status.
- Maintain Adequate Funds: Always keep enough funds in your account to avoid dropping below margin requirements.
- Be Prepared to Deposit Additional Funds: In the event that a margin call arises, be ready to promptly deposit additional funds into your account. Quick action can help you meet margin requirements and avoid the forced liquidation of your positions.
When you receive a margin call, it is essential to act quickly and decisively to restore your account to compliance.
There are two primary methods for fulfilling a margin call:
- Deposit the Full Margin Call Amount: Follow deposit instructions shown here.
- Reduce Your Open Positions
Taking timely action to address a margin call is important for maintaining the health of your trading account and avoiding potential restrictions or forced liquidation.
After making the deposit, promptly notify Phillip Nova by sending an email to nova_mo@phillip.com.sg with proof of your funds transfer. This step is crucial for confirming that your account has been topped up and for maintaining uninterrupted trading activities.
It is essential to promptly top up your account whenever your equity falls below the required margin level. Taking immediate action helps you avoid further complications and ensures that your trading positions remain unaffected.
If you do not restore your equity above the margin requirement, a forced liquidation of your positions will be initiated. This will occur according to the cut-off time specified in the margin call notification you receive. Therefore, always refer to the notification for the exact timing and act accordingly to prevent forced liquidation.
Forced liquidation actions are carried out on a best-effort basis and are subject to our discretion. During this process, your access to the trading platform may be restricted to prevent any further transactions. Additionally, any active orders linked to your account are likely to be canceled to minimise risk.
It is important to emphasise that customers should always maintain adequate margin levels in their accounts. Relying on forced liquidation to satisfy margin call obligations is not recommended. Maintaining sufficient margin at all times is the best way to avoid the adverse consequences of forced liquidation.
To fully satisfy a margin call, you must deposit funds that cover the highest margin call amount recorded on your account. Depositing a partial amount will not resolve the margin call. Similarly, liquidating positions without restoring your equity above the Initial Margin will not clear the margin call status.
Even after you have liquidated your open positions, your Equity may not exceed the Initial Margin requirement by the end of the business day. As a result, the margin call may remain in effect if the liquidation does not sufficiently restore your equity above the required level.
Always ensure that your deposited funds or risk-reducing actions are adequate to bring your Equity above the Initial Margin to fully resolve the margin call at the end of the business day.
Margin calls are determined based on your account status at the end of the business day. This means that even if you liquidate your open positions during the trading day, it does not necessarily resolve your margin call by the day’s close. The margin call may still remain in effect if your account equity is insufficient at the end of the business day.
To fully resolve a margin call, you need to deposit funds that cover the highest margin call amount recorded on your account. Only by topping up your account with the full required amount can you ensure the margin call is satisfied and avoid further account restrictions or forced liquidation.
Only activities that reduce your risk exposure are allowed. In some cases, your trading access may be limited further, and you may only be able to conduct transactions for the purpose of liquidating positions.
Margin call amount is based on the highest shortfall between Day 1 and Day 2.
If Equity is still below Initial Margin at cut-off time, forced liquidation will occur.
No. Controlled currencies (e.g., MYR, WON, IDR, INR, TWD, PHP, VND) cannot be used for contracts not denominated in them.
Even if there is a public holiday and the open position of your contract is closed for trading, it is essential that you still fulfill the Margin Call by topping up your account. If other contracts on the same exchange remain open for trading, your obligation to meet the Margin Call persists. Ensure that you deposit the required funds to bring your Equity above the Initial Margin, as failure to do so may result in forced liquidation or additional account restrictions.
Positions will be liquidated if in deficit. Phillip Nova does not distinguish contracts on LTD.
Liquidation may occur within the last hour before cessation if still in deficit.
If you have opted in to Shares Margin Trading, your securities may be liquidated. Please note that your fully paid-up securities may also be forced liquidated if an overloss arises in your account. This measure is being taken to cover any outstanding deficits.
While selling securities is permitted, it is always advisable to top up your account with funds. Depositing funds provides an immediate and effective way to resolve margin calls and reduces the likelihood of forced liquidation or additional account restrictions.
Bank Guarantees (BGs) are accepted only as collateral to support the Initial Margin requirement for Futures and Options on Futures.
Low Equity Policy
An account is deemed to be in Low Equity status when its Equity falls below 50% of the Initial Margin (IM) required for the open positions held.
When this threshold is reached, Phillip Nova reserves the right—but not the obligation—to initiate forced liquidation on a best-effort basis, without prior notice, in accordance with the Customer Trading Agreement. While Phillip Nova will generally attempt to notify customers of their low-equity status, such notification is not guaranteed.
In such circumstances, Phillip Nova may, at its sole and absolute discretion, liquidate any or all open positions, in any sequence or manner it deems appropriate.
Phillip Nova further reserves the right to review or amend the Low Equity and Stop-Loss thresholds from time to time, having regard to prevailing market conditions and the risk profile of each account.
When your account equity falls into Low Equity status, Phillip Nova may, but is not obliged to, issue a notification. Such alerts are sent strictly on a best-effort basis and should not be relied upon as your sole means of monitoring risk.
Forced liquidation of open positions may occur at any time, with or without prior notice, and Phillip Nova retains sole and absolute discretion to determine which positions to liquidate and in what sequence.
You are responsible for continuously monitoring your account and ensuring your equity remains above the required margin level. Proactive management is essential to avoid forced liquidation or other risk-control actions.
The forced-liquidation threshold is generally set at 20% of the Initial Margin (IM) required for your open positions.
When your account equity falls below 50% of the IM, it enters Low Equity status, where Phillip Nova may—but is not obliged to—issue a warning or initiate liquidation on a best-effort basis.
If your equity continues to decline to 20 % of the IM or lower, Phillip Nova may, at its sole and absolute discretion and without prior notice, forcibly liquidate part or all of your positions to protect its interests and cover potential losses.
Phillip Nova reserves the right to amend the Low Equity and Stop-Loss thresholds at any time without notice, based on prevailing market conditions and the risk profile of each account. Customers should monitor their equity closely and maintain sufficient funds to avoid forced liquidation.
Top-up your account or reduce positions so that equity meets or exceeds Initial Margin. Deposits must be cleared and booked to avoid liquidation.
Follow deposit instructions and send remittance proof to nova_mo@phillip.com.sg.
If you have opted in for Shares Margin Trading, your securities will be liquidated.
Please note that your fully paid-up securities may also be forced liquidated if an overloss arises in your account. This measure is being taken to cover any outstanding deficits.
Phillip Nova reserves the right to liquidate positions and restore margin without any restriction to the trading session.
If your account enters a low equity state, you have the option to sell your securities to meet margin requirements.
However, if the proceeds from the sale of your securities are not sufficient to cover the margin deficiency, your account will continue to be classified as having low equity. In such cases, additional actions, such as further reducing positions or depositing additional funds, may be necessary to resolve the situation.
Weekend Risk Policy
Introduced in March 2020, this policy safeguards accounts for drastic market gaps during weekend or exchange holiday openings. Customers must maintain at least 80% of Initial Margin (IM) in equity to carry positions over weekends or holidays.
This does not apply to trading on MT5.
Either top up your equity or reduce your positions to lower the Initial Margin requirement.
Use the formula: (Equity / Initial Margin) × 100 = Remaining Equity in %. This shows your equity as a percentage of the required Initial Margin.
Every Friday and on the eves of exchange holidays for the relevant contracts.
Follow deposit instructions and send remittance proof (screenshots) to nova_mo@phillip.com.sg. Follow up with a call to the Risk Management Team at 6597 3238 if no acknowledgement is received.
Accounts that fall below the required 80% equity to Initial margin threshold are subject to forced liquidation.
Forced liquidation is carried out on a best-effort basis. The outcome may depend on prevailing market conditions and available liquidity at the time of liquidation.
You are responsible for monitoring your accounts and maintaining sufficient margin at all times to avoid forced liquidation.
Final Notice Day/Last Notice Day
If you do not liquidate your open positions one business day before FND/LTD, you might face the risk of physical delivery.
Physically deliverable futures have to be liquidated one day prior to FND (First Notice Day) and/or LTD (Last Trading Day). However, there are some contracts which require earlier liquidation[i]. This is to avoid the risk of illiquidity as contracts near expiry.
The day a contract has to be liquidated is known as its Liquidation Day. On Liquidation Day, expiring positions have to be liquidated or rolled no later than 11pm Singapore time or 30 minutes prior to the close, whichever is earlier.
Please contact the Futures Dealing Desk at (65) 6535 1155/ (65) 6536 7633 if you require any further clarifications on liquidating your open position to avoid physical delivery.
[i] Including but not limited to NYMEX WTI Crude Oil futures (CL) and exchanges such as APEX, BURSA, DCE, HKEX, INE, JPX and ZCE.
We encourage you to liquidate your position for your physical deliverable contract at least two days prior to FND for long positions and at least two days prior to LTD for short positions. This is to mitigate the risk of thin liquidity. Phillip Nova will assist to liquidate all open positions that are not squared one day prior to the FND/LTD.
However, please note that the liquidation day may vary due to the nature of product, exchange requirements or holidays. Please contact the Futures Dealing Desk at (65) 6535 1155 or Commodities Dealing Desk at (65) 6576 9810 to check on the actual liquidation day for the contract you are trading in, or look out for the notification email sent to you when the contracts are nearing expiry.
You are strongly encouraged to monitor your positions so that you are aware of the FND/LTD of the respective future contracts in your portfolio.
You will be reminded to liquidate affected positions via email.
Failure to liquidate or roll your position(s) by the required time will result in force liquidation by Phillip Nova Pte Ltd. This is necessary in order to prevent any physical delivery of the contract which we do not facilitate.
The liquidation by Phillip Nova will be carried out on a “best efforts” basis. In the event that we are unable to carry out the liquidation successfully, we will not be held liable to our clients for any direct or indirect losses, costs or damages of any kind arising from your position being subjected to delivery.
To avoid physical delivery
The vast majority of physical deliverable futures contracts are traded by hedgers or speculators with no interest in taking or delivering the underlying asset. Most traders simply close out the positions by purchasing offsetting contracts to avoid the risk of physical delivery.
To avoid thinning liquidity
Towards the last day of trading, physically-settled contracts will typically experience thin liquidity. This is due to the fact that traders who do not intend to convert their futures contracts to physical goods would have already exited the market either by rolling over their positions to the next delivery month or simply closing out their positions to avoid physical delivery. Naturally, such actions by traders who hold larger positions would have more significant impact on price movements and markets are therefore subject to more intense volatility as the futures contracts head towards expiration.
Please approach our Client Service team at the Main Office or Investor Centres during operating hours for more information on the First Notice and Last Trading Day.
You can also contact the Client Service team at (65) 6538 0500 or email nova@phillip.com.sg.
Forced Liquidations
When an account is subject to forced liquidation, several approaches may be utilised. These include hedging positions or referencing prices from similar products if necessary. Throughout this process, access to the trading system may be disabled to prevent further activity, and all active orders associated with the account may be cancelled.
It is important to understand that slippage can occur during the liquidation process, potentially resulting in deficits within your account. Such risks are inherent to leveraged and securities margin trading. If your account experiences a deficit or overloss due to our forced liquidation, you are responsible for settling the shortfall.
Please note that your fully paid-up securities may also be forced liquidated if an overloss arises in your account. This measure is being taken to cover any outstanding deficits.
All actions related to forced liquidation are conducted on a best-effort basis and at our discretion. In periods of unforeseen market events and volatile conditions, the liquidation process may be delayed or hampered. For this reason, customers are strongly advised to maintain sufficient margin at all times and not to rely on forced liquidation as a primary risk management measure.
Phillip Nova reserves the right to amend the forced liquidation threshold in accordance with market conditions and the risk profile of each account.
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