Managing your investment

Managing margin calls

Using GearUp to manage margin calls

The most important part of managing margin calls is to be proactive. To make this easy, we recommend that you use GearUp, our secure online client service website which allows you to have greater control.

GearUp gives you easy access to up-to-date information such as real time prices (with a 20 minute delay), current loan balances, recent transaction histories and daily statements, and also gives you the ability to calculate the gearing position of your portfolio whenever you choose.

Plus, you have the ability to transfer funds from your nominated bank account online to actively manage your facility to avoid a margin call.

If you fall into margin call, your facility will be highlighted in red. You have until 2pm on the 3rd business day after the day the margin call is made to satisfy that margin call. GearUp allows you to take action quickly, and the sooner you can address the margin call the better.

How to satisfy a margin call

Macquarie Investment Lending offers five primary methods of satisfying a margin call:

  1. Deposit cash
  2. Provide additional shares and managed funds
  3. Sell shares or managed funds
  4. Purchase put options
  5. Market rally

1. Deposit cash

You can provide cash in order to reduce your Macquarie Margin Loan balance and your current gearing level. Instructions need to be received by 2pm (Sydney time) on the day the margin call is due1. Cash can be deposited in the following ways:

  • Use GearUp to transfer cash into your Macquarie Margin Loan from your nominated bank account.
  • Direct credit your Macquarie Margin Loan via your financial institution's internet banking. Confirmation from your financial institution is required prior to 2pm (Sydney time) on the day the margin call is due.
  • Contact us to arrange a debit from your nominated bank account.

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2. Provide additional shares and managed funds

You can provide additional shares or managed funds as security for your Macquarie Margin Loan or "switch" into a managed fund or share which has a higher LVR.

Please ensure you fax your completed form(s) to Macquarie Investment Lending prior to 2pm (Sydney time) on the day your margin call is due1.

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3. Sell shares or managed funds

You can sell securities in your portfolio and use the net proceeds to reduce your Macquarie Margin Loan balance and, as a result, your current gearing level.

There is an easy formula to work out the value of securities that must be sold:

Margin call amount ($) / (1 - LVR of the security being sold)

To show how this works, let's have a look at the following example:

Margin call issued = $5,000
Investor holds 1 share with a 70% LVR

Using the above formula:

$5,000 / (1 - 0.70) = $5,000 / 0.30 = $16,667

So, the dollar value of shares that need to be sold is $16,667.

If you choose to sell shares, please fax or email the contract notes to Macquarie. If you are redeeming managed funds, you need to complete the Managed Fund Redemption Form (55Kb) and fax it to Macquarie Investment Lending.

Whichever option you choose, it must be completed prior to 2pm (Sydney time) on the day your margin call is due1.

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4. Purchase put options

You can buy a put option against appropriate shares through Macquarie Trading Power, an additional service offered to clients with a Macquarie Margin Loan. This may increase the available LVR and move the Macquarie Margin Loan out of margin call.

Find out more about Macquarie Trading Power.

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5. Market rally

If your current gearing level is sufficiently reduced by a rally in the price of the securities in your portfolio within the satisfaction timeframe, the margin call will be satisfied. This is determined based on end of day prices, or by 2pm (Sydney time) on the day the margin call is due1.

Please note: if you do not initiate any of the above actions, Macquarie Investment Lending will act on your behalf - usually selling securities to reduce your Macquarie Margin Loan balance.

If you have any questions about Macquarie Investment Lending's margin call process, please contact us.

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1The Borrower shall comply with any margin call by 2pm on three (3) Business Days following the margin call, unless otherwise notified by Macquarie Bank Limited in its absolute discretion.

The Macquarie Margin Loan is offered by Macquarie Bank Limited ABN 46 008 583 542, AFSL No. 237502 ("Macquarie"). Full terms and conditions are set out in the relevant loan contracts. Fees, charges and government taxes are payable.