1. Margin financing does not necessarily enable leverage. But if leverage is enabled, then margin financing must have occurred.
For example, if a client has only SGD cash in his Tiger Account and wants to trade US stocks:
- ① if the value of the US stocks traded does not exceed the SGD cash amount, then there is only financing and no leverage is enabled;
- ② if the value of the US stocks traded exceeds the SGD cash amount, then financing occurs and leverage is enabled.
Leverage = Total Stock Value / Equity with Loan (Equity with Loan (ELV) = Total Assets Value - US Stock Options Value)
2. The leverage amount that can be enabled depends on stocks. Tiger Margin Account supports up to 4-time intraday leverage and 2-time overnight leverage. The margin percentage occupied by trading a stock affects the leverage amount that can be enabled for that stock.
3. Whether a position is forced to be closed is based on the excess liquidity only.
Intraday Excess Liquidity = ELV - Maintenance Margin Requirement (Stock Value * Maintenance Margin Percentage ≈ Initial Margin Percentage)
Overnight Excess Liquidity = ELV - Overnight Margin Requirement
An Excess Liquidity < 0 will force the position to be closed.