What is a margin close-out (MCO) rule?
If the total margin in a retail client’s account falls under 50% of the amount of initial margin required in respect of the open positions, the company will close one or more of the positions in order to ensure that retail investors’ margin is not eroded close to zero. MCO also applies to positions with a Stop Loss Order or limited risk protection.
The MCO rule will not prevent investors from choosing to ‘top up’ their margin if they wish to do so.
Company’s default MCO rule
Under the default setting, when MCO is triggered the open position with the least volume will be closed automatically. This action will be repeated at any time MCO is triggered and may be repeated until all open positions are closed. In case MCO is triggered and the symbol of a position is out of market hours, then the position will not be closed.
Margin Close Out is always triggered at 50% apart when adverse market conditions exist. In such rare cases the MCO is triggered at the closest rate possible to 50%.
For further details regarding the company’s execution of orders please refer to the Order Execution Policy that forms an integral part of the service agreement.