Margin Buying Power

1. Basic Buying Power

Basic buying power is the customer’s excess margin, calculated as the difference between the actual assets in the margin trading account and the required margin value.

Actual assets = Total assets – Total liabilities

Basic buying power = Actual assets – Total (Securities value * Initial margin ratio)

2. Margin Buying Power

Margin buying power for a specific stock is the maximum value of that stock that the customer can buy. Pinetree calculates margin buying power based on the customer’s basic buying power, the initial margin ratio, and the remaining room for the stock the customer wishes to purchase.

Margin buying power = Basic buying power / Initial margin ratio

Example 1: Account with Cash Only

A customer deposits 100 million VND in cash into their margin account at Pinetree and plans to buy stock X (initial margin ratio: 60%) or stock Y (initial margin ratio: 50%). In this case:

• Actual assets = 100 million VND (consisting of 100 million VND in cash)
• Basic buying power = 100 – 0 = 100 million VND
• Margin buying power for X = 100 / 60% = 166.7 million VND
• Margin buying power for Y = 100 / 50% = 200 million VND

Example 2: Account with Cash and Securities

The same customer has purchased 80 million VND worth of stock X and now plans to buy stock Y. In this case:

• Actual assets = 100 million VND (consisting of 20 million VND in cash + 80 million VND in securities)
• Basic buying power = 100 – (80 × 60%) = 52 million VND
• Margin buying power for Y = 52 / 50% = 104 million VND

Example 3: Account with Securities and Debt

The customer has purchased 80 million VND worth of stock X and 60 million VND worth of stock Y, with a loan of 40 million VND. The customer now plans to buy more of stock X (with an initial margin rate of 60%). In this case:

• Actual assets = 100 million VND (consisting of 140 million VND in securities – 40 million VND in debt)
• Basic buying power = 100 – (80 × 60% + 60 × 50%) = 22 million VND
• Margin buying power for X = 22 / 60% = 36.7 million VND

Example 4: Purchasing Power Changes Based on Asset Value

The customer has purchased 80 million VND worth of stock X and 60 million VND worth of stock Y, with a loan of 40 million VND. Later, the value of stock X increases to 81 million VND, and stock Y rises to 62 million VND. The customer now plans to buy more of stock X (with an initial margin rate of 60%). In this case:

• Actual assets = 103 million VND (consisting of 143 million VND in securities – 40 million VND in debt)
• Basic buying power = 103 – (81 × 60% + 62 × 50%) = 23.4 million VND
• Margin buying power for X = 23.4 / 60% = 39 million VND

Note: To simplify calculations, the above examples do not account for fees, taxes, and assume that all stocks the customer intends to buy still have available trading room.