In margin trading, the guarantee ratio is an important monitoring indicator to assess the credit risk profile of investors. When the margin ratio falls below a certain level, the liquidation operation will be triggered to protect the interests of the company.
According to the regulations, when the investor's maintenance guarantee ratio is lower than the liquidation line, the company will notify the investor to make up the collateral within 2 full trading days to restore the guarantee ratio to more than 140%, otherwise the forced liquidation will be carried out. The margin ratio of the liquidation line is generally 130%.
Further, the warning line is the state when the guarantee ratio is equal to 140%. When the investor's maintenance guarantee ratio is lower than the warning line, the company will notify the investor to pay attention to the change in the account guarantee ratio before the market opens the next day.
Here's an example:
Assuming that the total assets of the credit account of the investor Xiao Ming are 5 million yuan and the total liabilities are 2 million yuan, then the guarantee ratio of Xiao Ming is 500 200 = 250%. In this case, Xiao Ming's guarantee ratio is much lower than the liquidation line of 130%.
If the market value of Xiao Ming's position** causes the margin ratio to be further reduced to 100%, which is lower than the liquidation line, the company will notify Xiao Ming to make up the collateral within two full trading days, so that the guarantee ratio will rise to more than 140%. If Tom fails to make up the collateral within the specified time, the company will perform a forced liquidation operation, and Tom's position will be repaid to repay the loan.
It should be noted that different ** companies may have slightly different regulations and requirements, and the specific closing line and warning line may be different. Investors should understand the specific regulations of the ** company they choose before conducting margin trading, and properly manage the guarantee ratio to avoid the risk of liquidation. **Forced liquidation system