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What are the margin requirements and concentration guidelines for TD Direct Investing's margin accounts?
Margin requirement is the amount of money you can borrow against securities you hold. Some securities have higher margin lending rates than others. Regardless of the margin requirement, concentration guidelines set limits on the amount that can be borrowed against a security, or on the maximum dollar value of a short position.
Concentration limits are generally tied to individual security margin requirements/loan rates and/or security types. It is important to understand these limits to avoid margin or concentration calls.
When you use margin to buy a security, you need to pay interest on that amount.
Example: You want to buy a security with a margin requirement of 30%. TD Direct Investing will lend you 70% of the purchase price, but only up to the concentration limit of $1,500,000.
Note: Using borrowed money to finance the purchase of securities involves greater risk than a purchase using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. An investment strategy that uses borrowed money could result in far greater losses than an investment strategy that does not use borrowed money.
The following guidelines apply to margin accounts from TD Direct Investing. Additional requirements may apply depending upon the specific transactions and positions in your account. Concentration loan above the standard limits can be applied and approved on an exception basis. For more information, please review the Margin Disclosure Statement and a few examples of margin calculations below:
Canadian/U.S. Listed Equity and ETF Securities
| Margin Requirement |
Concentration Guidelines |
| 30% |
$1,500,000 Loan Value |
| 50% |
$750,000 Loan Value |
| 65% |
$250,000 Loan Value |
| 75% |
$100,000 Loan Value |
| 100% |
Not Applicable |
| Canadian Listed Equity and ETF Securities |
Margin Requirement |
| TSX listed/IIROC Approved list ($5.00+) |
30% |
| TSX listed ($3.00+) |
50% |
| Double Leveraged & High Yield ETF ($3.00+) |
65% |
| TSX Venture ($3.00+) |
75% |
| Securities under $3.00 |
100% |
| U.S Listed Equity and ETF Securities |
Margin Requirement |
| Options eligible securities ($5.00+) |
30% |
| Listed securities ($3.00+) |
50% |
| Double Leveraged & High Yield ETF ($3.00+) |
65% |
| Securities under $3.00 |
100% |
| OTC Listed securities |
100% |
Securities With Higher Margin Requirements
Please be advised that we have reduced and/or limited the loan value and concentration guidelines on certain securities, due to their price volatility or liquidity. Review the list.
Foreign Securities
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| IIROC eligible foreign indices* |
50% |
$750,000 Loan Value |
| Other Foreign Stock |
100% |
Not Applicable |
*List of foreign market indices whose constituent securities are eligible for margin under IIROC Dealer Member Rule 100.2(f)(ii)
Mutual Funds
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| Mutual Funds priced over $3.00 per unit (excluding money market mutual funds) |
50 % |
$750,000 Loan Value |
| High Yield Mutual Funds over $3.00 per unit (excluding money market mutual funds) |
65 % |
$250,000 Loan Value |
| Mutual Funds priced under $3.00 per unit |
100 % |
Not Applicable |
| Money Market Mutual Funds priced over $3.00 per unit |
5 % |
$2,000,000 Loan Value |
Bonds
Note that margin is not extended for any bond with a Credit Rating below Investment Grade BBB-, Baa3, BBB (LOW)
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| Government of Canada |
4% |
$2,000,000 Loan Value |
| Provincial Bonds |
5% |
$1,000,000 Loan Value |
| Municipal Bonds |
20% |
$1,000,000 Loan Value |
| U.S. Treasury Bonds |
4% |
$2,000,000 Loan Value |
| Corporate Bonds |
15% |
$750,000 Loan Value |
| Investment Grade |
15% plus (100% of excess Market Value over par with a minimum of 10% of par) |
$500,000 Loan Value |
| All other Convertible Bonds |
100% of excess Bond Market Value over the Underlying Conversion Value plus (Underlying Conversion Value x Underlying Common Stock Margin Requirement (%) |
$500,000 Loan Value |
| Eligible Investment Grade Global Bonds |
25% |
$750,000 Loan Value |
| Mortgage-backed securities (Canadian issues only) |
10% |
$750,000 Loan Value |
| Strips - Maturity less than 20 years |
1.5 times applicable rate |
$750,000 Loan Value |
| Strips - Maturity of 20 years and greater |
3 times applicable rate |
$250,000 Loan Value |
Money Market
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| Canada Savings Bonds |
100% |
Not Applicable |
| Provincial Savings Bonds |
1% |
$1,000,000 Loan Value |
| T-Bills |
1% |
$2,000,000 Loan Value |
| GICs* |
15% |
$1,000,000 Loan Value |
| Term Deposits |
4% |
$1,000,000 Loan Value |
| Banker's Acceptance |
4% |
$750,000 Loan Value |
| Commercial Paper |
15% |
$750,000 Loan Value |
*Margin requirements for GICs from a non-investment grade issuer are not eligible for a loan.
Precious Metals (Certificates)
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| Gold/Silver/Platinum* |
30% |
$250,000 Loan Value |
*Short Selling on precious metals is not permitted.
Other
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| Listed Warrants ($3.00+) |
50% |
$250,000 Loan Value |
| Listed Warrants ($3.00+, with higher margin requirement) |
75% |
$25,000 Loan Value |
Short Selling Equity, Bonds and ETF Securities
Short Selling Canadian/U.S Listed Equity and ETF Securities $3.00+
| Margin Requirement (plus 100%) |
Concentration Guidelines |
| 130% |
$1,000,000 Market Value |
| 150% |
$500,000 Market Value |
| 175% |
$100,000 Market Value |
| Category of Security |
Margin Requirement |
Concentration Guidelines |
| Federal Bonds |
104% |
$2,000,000 Market Value |
| Provincial and Provincial Guaranteed Bonds |
105% |
$750,000 Market Value |
| Corporate Bonds |
Not permitted |
Not permitted |
| Listed Equities |
200% of Market Value |
$50,000 Market Value |
| Listed Equities |
$3 per share |
$50,000 Market Value |
| Listed Equities |
200% of Market Value |
$50,000 Market Value |
| Listed Equities |
Not permitted |
Not permitted |
| Listed Warrants |
150% |
Contact an Investment Representative |
Note: For security categories not listed on the above list, please contact an Investment Representative at 1-800-465-5463.
Please note that the answers to the questions are for information purposes only for the products discussed. Individual circumstances may vary. In case of discrepancy, the documentation prevails.