Do I need to deposit funds into my KGI Trading Account before giving a trading order?

This depends upon three factors:

• your Purchasing Power (PP) at KGI; and
• the risk class of the stock you wish to buy; and
• your credit limit at KGI

For most Hong Kong Stocks and some stocks in China, US and Japan market, the purchase does not require pre-funding depending on the then prevailing PP of your account and the margin ratio¹of the stock being purchased.

For example:

if the current PP of your Trading Account is HKD 20,000 and the margin ratio of the Hong Kong Stock being purchased is 60%, you can purchase up to HKD 50,000 worth of the stocks without depositing funds beforehand. You can also call our 24-hour InvestLine at (852) 2878-5555 or contact your Investment Representative to know more about the Margin Table.

If these shares are non-marginable stocks, the maximum amount of these stocks you can buy without depositing additional funds before placing an order is the prevailing PP.

However, if you are on margin call, you will need to satisfy the margin requirement before any further purchases can be put through.

Note 1: Margin ratio: up to 85% for Hong Kong Stocks, and up to 70% for China, US and Japan stocks.

What is Purchasing Power (PP)?

PP is the amount available for purchase stock depending on its risk class. In general, the figure is based upon your ledger balance and the total marginable value of the stock portfolio in your KGI Trading Account. PP amount  would be deducted by the required haircut¹ amount when you place a buy order.

For margin clients, the marginable value of a stock represents the amount for financing from the stock holding. For cash clients, the marginable value can enhance your immediate PP. Full settlement of the transaction amount is still required on the settlement date of the relevant trade.

Example: If your PP is HKD 100,000 in cash or your margin account, you can purchase without pre-funding up to about (approximations only):

• HKD330,000 of Hong Kong Stocks with margin ratio 70%, or
• HKD140,000 of Hong Kong Stocks with margin ratio 30%, or
• HKD100,000 of non-marginable stocks

The above example demonstrates that you don't  need to have the sufficient cash in your Trading Account before placing a buy order. However, you still need to fully settle the transaction amount on the settlement date (for cash accounts) or to fulfill the margin call that maybe arises subsequent to the transaction (for cash and margin accounts).

You can also call our 24-hour InvestLine at (852) 2878-5555 or contact your Investment Representative to know more about the Margin Table.

Note 1: Haircut = 1- margin ratio. For instance, 60% margin ratio stock means 40% haircut

What is "Cash PP"?

"Cash PP" indicates the total value of securities that you can purchase "Non-eligible Securities for Margin Trading" at this moment. The figure is based on your ledger balance in your KGI Trading Account.

No matter for margin clients or cash clients, full settlement of the transaction amount is required on the settlement date of the relevant trade.

Example: If your Cash PP is HKD 100,000, you can purchase up to about (approximations only):

• HKD 100,000 non-marginable China stocks.

The above example demonstrates that you need to have sufficient cash in your Trading Account before placing a buy order. Also, you must fully settle the transaction amount of the relevant trades on settlement date (for cash and margin accounts).

You can also call our 24-hour InvestLine at (852) 2878-5555 or contact your Investment Representative to know more about the Margin Table.

When does my Purchasing Power (PP) get updated once I make a HKD/USD deposit into my KGI Trading Account?

Non-cheque deposits:

With inter-bank transfer, cash deposit, HSBC/ Hang Seng Bank/ Standard Chartered Bank phone banking and electronic banking services via a Hong Kong source, your Purchasing Power will be updated within 2 hours¹ for normal bank's service hours.

With PPS Services and Online Bank Bill Payment Services (exclude HSBC, Hang Seng and Wing Lung Bank), if you make successful depositing before the cut-off time, your Purchasing Power will be updated on the next business day.

Cheque deposits:

With cheque depositing, if your deposit is up to a maximum of HKD 50,000², will be updated in your Purchasing Power within 2 hours1 for normal banks' service hours. And if your deposit exceeds this amount, the full amount will also be shown in your Purchasing Power once the cheque is cleared.

Note 1: Within 2 hours on receipt of notification by KGI, excluding Saturdays, Sundays and Public Holidays (HKT).
Note 2: Regardless of the number of deposits made on a single day.

Can I trade stocks on margin financing?

You can trade stocks on margin financing if you have a margin account. You can also call our 24-hour InvestLine at (852) 2878-5555 or contact your Investment Representative to know more about the Margin Table.

What is a credit limit?

Credit limit is applicable to a margin account and it determines the total maximum amount on settlement date that may remain outstanding under the account.

What is a margin call?

The different definitions of the margin call are applicable to different types of accounts as follows:

Cash Accounts

A margin call will be issued when there is overdue payment that remains outstanding after the settlement date, or at any time or from time to time as required by KGI.

Margin Accounts

A margin call will be issued when the marginable value of the account's portfolio is not enough to cover the total amount outstanding under the account or when the amount on a value day basis that remains outstanding under the account is greater than the approved credit limit or otherwise at any time or from time to time as required by KGI. Thus, the margin call amount will be the greater of the amount in excess of the marginable value of the account's portfolio or the approved credit limit or the amount demanded by KGI.

Once you are on margin call, you will not be able to buy any more stocks and withdraw securities or cash, and you will have to pay up the margin call amount immediately by cash depositing, depositing of additional securities collateral and/ or liquidating an appropriate amount of your portfolio (as applicable). If you fail to satisfy the call, your portfolio can be partially or totally liquidated without any prior notice.

Note: KGI reserves the right to change its credit limit, margin and forced liquidation policies either generally or in any particular case without any prior notice.

Do I need to deposit funds into my KGI Trading Account before giving a trading order?

In the futures and options markets, both buyers and sellers need to deposit an initial margin, which usually an amount to be used to cover daily market price fluctuations. At the end of each trading day, investors' accounts will be adjusted according to the value of each contract or marked to market. If the initial margin deposit falls below the maintenance margin, after marking-to-market, a margin call will be issued and investors must deposit additional funds in corresponding currency or eligible collateral to restore the account to the initial margin level.

If you instruct KGI to enter into a futures or options transaction effected in a foreign currency, (i) any profit or loss resulting from the exchange rate fluctuations of such foreign currency will be at your own risk; and (ii) all deposits for margin purposes shall be made in cash in the foreign currency unless KGI requires others otherwise. KGI reserves the right to convert from funds in your account to money in foreign currency at the rate of exchange determined by KGI in its sole discretion on the basis of the then prevailing money market rates for handling such transactions and/or exercising KGI's rights. Any all cost to currency conversion should be borne by you.

Where can I check the margin requirements?

The margin requirements table for HK Futures and Global Futures can be found[GL1] from the [Service Fee] section on our website.

When does my Buying Power get updated once I make a HKD/USD deposit into my KGI Trading Account?

Non-cheque deposits:

With inter-bank transfer, cash deposit, HSBC/ Hang Seng Bank/ Standard Chartered Bank phone banking and electronic banking services via a Hong Kong source, your Buying Power will be updated within 2 hours¹ for normal banks' service hours.

With PPS Services and Online Bank Bill Payment Services (exclude HSBC, Hang Seng and Wing Lung Bank), if you make successful depositing before the cut-off time, your Buying Power will be updated on the next business day.

Cheque deposits:

With cheque depositing, if your deposit is up to a maximum of HKD 50,000², your Purchasing Power will be updated in your Buying Power within 2 hours¹ for normal banks' service hours. And if your deposit exceeds this amount, the full amount  will also be shown in your Buying Power once the cheque is cleared.

Note 1: Within 2 hours on receipt of notification by KGI, excluding Saturdays, Sundays and Public Holidays (HKT).
Note 2: Regardless of the number of deposits made on a single day.

What is a margin call?

A margin call will be issued when the account value in the market is lower than the maintenance margin requirement of all futures and options positions.

Once you are on margin call, you will not be able to open new positions and you will have to pay up the margin call amount immediately by cash depositing, eligible collateral for stock options and/ or closing out an appropriate number of existing positions. If you fail to satisfy the call, your positions will be partially or totally liquidated immediately without any further notice.

Once you settle the margin call, please inform our Customer Service Officers by calling our 24-hour InvestLine at (852) 2878-5555 or contact your Investment Representative.

Note: KGI reserves the right to change its margin call and forced liquidation policy either generally or in any particular case without prior notice.