The major casualties of the day were small investors who were forced to sell on margin calls
. According to figures National Clearing Company figures, individuals disposed of equity worth $5.85m.
Japan's benchmark rate slipped to a low of just 0.001%, before a rise in futures triggered margin calls
and the yield bounced back to now 0.029%, a gain of 1.6 bp on the day.
"After close to 10 percent fall in the last two weeks, there are margin calls
which is affecting share prices," said Mohammed Sohail, chief executive of Topline Securities brokerage.
Aas failed to meet required payments called margin calls
to Nasdaq to insure against losses on Tuesday.
Investors must have liquidity to fund these margin calls
-- if not, the bank reserves the right to unwind the entire structure by pre-maturely breaking the NRE deposit.
Further market falls could also trigger a vicious cycle of selling, as a large proportion of shares in China's stock market are pledged against loans, and could potentially face margin calls
, he said.
ProtoColl automatically calculates excess and deficient margin requirements for each active agreement, in addition to generating all necessary margin calls
and associated notifications.
"Every time the stock market goes down, you have more margin calls
so there's a domino effect." The losses spread quickly to the wider market, partly because its highly leveraged shareholders were prevented from selling Arabtec stock by rules that limit one-day declines to 10 per cent, Qaqish said.
In the High Court, a judge ruled that Deutsche Bank was not in breach of contract and that Sebastian Holdings would have to pay the financial [pounds sterling]146m (E174m, $235m) in compensation for unpaid margin calls
from 2008 to the group.
Now, many UBS clients have been forced to liquidate hundreds of millions of dollars in holdings in these funds after incurring margin calls
. As a result of the losses, securities arbitration claims have already begun to be filed with FIRNA's arbitration department to recover losses on behalf of Puerto Rico closed-end bond fund investors.
There would be a default on Treasury securities, which would cause margin calls
. The financial system could freeze up like in 2008.