We would like to inform you about the changes to Vestle’s Margin Close-out Protection mechanism, which will be effective as of the 14th of October 2018 in all your existing and new deals.

In accordance with the new mechanism, should the funds available in the client’s account Equity be equal to or fall below the Maintenance Margin, the Company will auto close the highest consuming Used Margin deal, to achieve the lowest possible Maintenance Margin.

In cases where multiple deals (more than one) are consuming the highest Used Margin equally, the Company will auto close the deal that was opened first.

In the event that the lowest possible Maintenance Margin cannot be achieved by the auto closing of a single deal, the Company will auto close all open deals under a specific instrument.

Vestle will allow clients the full use of the unrealized profits in their Open Deals, in order to support their losing deals.

Please remember that Maintenance Margin is equal to 50% of the Used Margin and is displayed as a monetary amount.

If the client’s account Equity falls to the Maintenance Margin amount or below it, the Margin Close-out Protection mechanism will be triggered.

This indicator is available in the Account Summary’s Simple View.

Examples

Example I

This example involves a situation where a client holds multiple deals open and the account Equity reaches a level equal to or below the Maintenance Margin:

• Open Deals:
  • 1 EUR/USD deal: BUY €60,000 @ rate 1.1750 (Initial Used Margin Required = 3.33% x €60,000 = €1,998)
  • 1 Germany 30 deal: BUY 4 contracts @ rate 12,500 (Initial Used Margin Required = 5% x 4 x €12,500 = €2,500)
  • 1 WTI Oil deal: BUY 500 barrels @ rate 70.00 or 59.56 a barrel when value is in Euro (Initial Used Margin Required = 10% x 500 x €59.56 = €2,978)
• Used Margin = €1,998 + €2,500 + €2,978 = €7,476
• Margin Maintenance Level = €3,738

As soon as the account’s Equity reaches a level equal to or below €3,738, the Margin Close-out Protection will be triggered by closing the deal consuming the highest Used Margin, which is the BUY 500 barrels of WTI Oil.

Example II

This example involves a situation where a client holds multiple deals open and the account Equity reaches a level equal to or below the Maintenance Margin:

• Open Deals:
  • 2 USD/JPY deals: BUY $100,000 (Initial Used Margin Required = 3.33% x $100,000 = $3,330), SELL
    80,000 (Initial Used Margin Required = 3.33% x $80,000 = $2,664)
  • 1 USD/TRY deal: SELL $80,000 (Initial Used Margin Required = 5% x $80,000 = $4,000)
• Used Margin = ($3,330 – $2,664) + $4,000 = $4,666
• Margin Maintenance Level = $2,333

As soon as the account Equity reaches a level equal to or below $2,333, the Margin Close-out Protection will be triggered by closing the deal consuming the highest Used Margin which is the SELL $80,000 USD/TRY.

Please note that:

• Closing the $80,000 SELL USD/JPY would increase the Net Exposure on USD/JPY from $20,000 to $100,000, thus the Used Margin would increase by $2,664. → ($100,000 x 3.33%) – (20,000 x 3.33%) = $3,330 – $666 = +$2,664
• Closing the $100,000 BUY USD/JPY would increase the Net Exposure on USD/JPY from $20,000 to $80,000, thus the Used Margin would increase by $1,998 → $(80,000 x 3.33%) – ($20,000 x 3.33%) = $2,664 – $666 = +$1,998
• Closing the $80,000 SELL USD/TRY would decrease the Net Exposure on USD/TRY from $80,000 to 0, thus the Used Margin would decrease by $4,000.

Example III

This example involves a situation where a client holds multiple Open Deals, however the lowest possible Maintenance Margin cannot be achieved by auto closing a single deal:

• Open Deals:
  • 3 USD/JPY deals: BUY $100,000 (Initial Used Margin Required = 3.33% x $100,000 = $3,330), SELL
    $70,000 (Initial Used Margin Required = 3.33% x $70,000 = $2,331), SELL $10,000 (Initial Used Margin
    Required = 3.33% x $10,000 = $333)
  • 2 USD/TRY deal: SELL $10,000 (Initial Used Margin Required = 5% x $10,000 = $500), Buy $8,000 (Initial
    Used Margin Required = 5% x $8,000 = $400)
  • 2 USD/RUB deal: SELL $10,000 (Initial Used Margin Required = 5% x $10,000 = $500), Buy $7,000 (Initial
    Used Margin Required = 5% x $7,000 = $350)
• Used Margin = ($3,330 – $2,331 – $333) + ($500 – $400) + ($500 – $350) = $916
• Margin Maintenance Level = $458

In this case, as soon as the Equity reaches a level equal to or below $458, deals in the account will be auto closed on an instrument level, based on the instrument with the highest Net Exposure.

Therefore, all USD/JPY deals will be closed.

Please note that:

• Closing any of the deals would increase the Net Exposure, hence the Used Margin would increase.
• Closing all USD/JPY deals will reduce Net Exposure by $20,000, thus the Used Margin would decrease by $666, which is greater than closing USD/TRY deals, which will decrease Used Margin by $100, or USD/RUB deals, which will decrease Used Margin by $150.

Vestle are updating the Client Agreement, Risk Warning and PRIIP KIDs (currencies, indices, cryptos, ETFs, commodities & shares CFDs) in accordance with the above, effective as of 14th October 2018.