QFMA issued margin trading rules on September 10, 2014. Subsequently, Qatar Stock Exchange and Qatar Central Depository issued their rules for margin trading and published them on their websites. Members Shall not engage in margin trading activity before obtaining a license from QFMA in accordance with the conditions and requirements contained in the rules. The QSE shall ensure the compliance of Financial Services Company with the provisions of the rules, and shall inform QFMA of any violation. Investors are kindly requested to read carefully margin trading rules and related procedures to make sure that their investment decisions based on full awareness and understanding of the benefits and risks associated with trading on margin.
Margin Trading Agreement Minimum Requirements
Definition of Margin Trading.
Statement on client's responsibility to obtain prior advice and understand the risks of margin trading, which include the following:
Possibility of client losing part of whole of the funds deposited in the margin trading account.
The right of the Financial Services Company to sell part of the securities purchased on margin in the event of the decline of the maintenance margin proportion less than the limit specified by the Agreement and the failure of the client to cover the shortfall in the maintenance margin within the period specified by the notice on the maintenance margin shortfall replenishment, provided that the securities may be sold to yield the best interest for the client.
A statement that the client’s securities and cash balance kept in the margin trading account and other collaterals are a guarantee to pay the amounts owed by the company to the margin trading account.
A statement providing that the client has the right to receive dividends and interest when due, and vote in the general assemblies of the companies in which he owns securities at the margin trading account.
A description of the amount of commissions and fees which will be collected by the financial services company from its client.
A description of the maintenance margin proportion, which shall not be less than the limit established in these rules.
A description of the procedures which will be carried out by the financial services company in the event of the decline of maintenance margin proportion less than the limit set in the Agreement, including the method of notifying the client thereof.
A statement providing that the client fully understand and approve the Margin Trading rules.
A statement showing the percentage of finance given by the Financial Services Company to the client.
A statement showing that the finance rate payable to the financial services company provided this rate shall not exceed the last finance price announced by Qatar Central Bank.
A statement providing for the funding period, which may be extended with the agreement of the two parties.
According to the provisions of Article (14) of QFMA rules: The ownership of the securities purchased by the client via Margin Trading shall entail rights to the Financial Services Company, which financed those securities. This company may claim its rights owed on its client's creditors even if they have special or general privileges.
Risks Vs Rewards
- The increase in the investor’s potential losses as compared to cash purchases.
- Financial Services Company can sell part or all securities kept in the Margin trading account on their discretion if the investor doesn’t cover the shortage of the account.
- The increase in the investor’s potential profits and rate of return on investment as compared to cash purchases.
- Increased purchasing power (Leverage).
|Symbol||Company Name||Symbol||Company Name|
|MERS||Al Meera Consumer Goods Co.||QNBK||QNB|
|QNCD||Qatar Cement||QIBK||Qatar Islamic Bank|
|MCGS||Medicare Group||IQCD||Industries Qatar|
|GWCS||Gulf Warehousing||MARK||Masraf Al Rayan|
|QIGD||Qatari Investors Group||CBQK||Commercial Bank of Qatar|
|WDAM||Widam Food Company||MPHC||Mesaieed Petrochemical Holding|
|ZHCD||Zad Holding Company||QIIK||Qatar International Islamic Bank|
|QIMD||Qatar Industrial Manufacturing||QATI||Qatar Insurance|
|QISI||Qatar Islamic Insurance||QEWS||Electricity & Water|
|QFBQ||Qatar First Bank||QGTS||Qatar Gas transport|
|QGMD||Qatar German For Medical Devices||ORDS||Ooredoo|
|QOIS||Qatar Oman Investment Co.||BRES||Barwa Real Estate|
|SIIS||Salam International||DHBK||Doha Bank|
|AKHI||AlKhaleej Takaful Group||QNNS||Qatar Navigation|
|DBIS||Dlala Holding||UDCD||United Development Company|
|NLCS||National Leasing||VFQS||Vodafone Qatar|
|MRDS||Mazaya Qatar||GISS||Gulf International Services Co.|
|IGRD||Investment Holding Group||QAMC||Qatar Aluminium Manufacturing|
|IHGS||Islamic Holding group||ERES||Ezdan Holding Group|
|QATR||Al Rayan Qatar ETF||QETF||QE Index ETF|
The liquidation of margin trading positions in the event of withdrawal of approval granted to any of the marginable securities
In the event of withdrawal of approval granted to any of the marginable securities, all open margin trading positions on those securities must be closed during a period that will be announced by the Exchange after QFMA approval. At the end of this time period those securities may not be held in the client’s margin trading account with the depository. And the client has the following options to close their positions in this case:
- Pay its related part of the margin loan financing
- Replace those securities with other marginable securities
- Sale of all or part of those securities