Margin amounts deposited to Istanbul Stock Exchange Settlement and Custody Bank Inc. (Takasbank) to take open positions (or for already purchased open positions) at TurkDex are called trade margins. Since all transactions are executed and monitored on account basis, margin must be deposited on account basis too.
Trade margins are categorized into three groups:
- Initial Margin: Margin amount required to take any open position at the Exchange is called initial margin. Required margin for each security or security type is specified in the relevant contract. Taking a long position at one maturity and a short position at the other in particular contracts written upon the same underlying asset and have common fundamental elements primarily the contract size is called creating a spread. Lower margin requirements may be set for spreads compared to the regular positions.
- Maintenance Margin: It is the minimum level initial margins permitted to drop as a result of loss incurred at the Exchange or depreciation in the value of the non-cash collateral is called the maintenance margin. If trade margin drops below the maintenance margin level, Takasbank issues a margin call.
- Extraordinary Cases Margin: The Exchange may request an extraordinary circumstances (case) margin in addition to the initial margin amount based on the principles established in the Exchange Directive.
Turkish Lira (TRY), foreign currency (USD, EUR), FX indexed bonds, government-bonds and treasury-bills, eurobonds, equities (included in ISE 30) and mutual fund certificates are accepted as collateral. At least 30% of total collateral must be deposited in cash. All non-cash collaterals are subject to haircuts determined by Takasbank according to the market risk of the related collaterals.
Daily “mark-to-market” valuation of collateral on account basis is accomplished by Takasbank.