A margin account allows you to increase your purchasing power by borrowing against the securities deposited in your account. (Registered accounts are not permitted to trade on margin.)
The Investment Industry Regulatory Organization of Canada (IIROC) determines whether a stock is marginable. We may limit the margin eligibility of equities from time to time in our sole discretion. If you are unsure about the "marginablity" of a stock, please contact us.
The interest rate charged on borrowed funds changes over time and depends on the debit balance and the type of account you have. When you borrow funds to invest in income-producing assets in a non-registered account, interest costs are tax-deductible.
Margin is available for stocks that trade on senior stock exchanges in Canada and the U.S. (TSX, NYSE, Nasdaq and Amex) and are option-eligible. No margin is provided for OTCBB, pink sheets, TSX Venture or CSE stocks.
- Stocks trading for $5 and over
margin loan: 70%
- Stocks trading for $3-$4.99
margin loan: 50%
- Stocks trading for $2.99 or less
ineligible for margin
- The margin requirement for uncovered index options is:
100% of the premium, plus the greater of:
‒ 15% of the market value of the underlying position, less out-of-the-money amount, or
‒ 5% of the market value of the underlying (call) / aggregate exercise (put).
Subject to a maximum concentration $500,000 margin limit.
- To trade on margin, you need to have at least $2,000 in cash or marginable securities in your account.
- $10,000 equity is required for short selling, uncovered equity options and spread trading.
- $25,000 equity is required for uncovered index options.
- A margin account with a large margined holding in one security or one sector, and little or no diversification in other holdings or sectors, can be deemed to be "concentrated." As a result, the loan value of the security may be reduced.
- You cannot borrow against a single marginable stock to buy more of the same stock.
- You should leave a 10% margin cushion. Withdrawals below 10% margin may be allowed at the discretion of our credit department.
Our credit policy is available on our website under Customer Agreements and Disclosure Documents.