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What is collateral and how does it work?

April 26, 2017collateral

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What is collateral and how does it work?

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When opening a CFD position a deposit of cash collateral is required rather than payment for the full value of the underlying position. The amount of collateral required is based on the market value of the position and must be maintained throughout the life of the position. In addition to holding sufficient funds in your Account to meet any fees and charges, you are required to make Collateral available in respect of each Order to open a new CFD position, as well as your existing CFD positions. You will be notified of the Required Collateral Amount for each Order and you should ensure that you have sufficient funds in your CFD Account to cover that amount.