What margin is required to trade index CFDs?
Verdict
- At Pepperstone, our pick, retail clients of the Bahamas entity that serves Singapore pay margin of 0.5% on major index CFDs (leverage up to 1:200), so a $20,000 US500 position needs $100.
- Professional clients can go to 0.2% on major indices (1:500) and 1% on minor indices (1:100); Pepperstone's ASIC and FCA retail clients need 5% on major indices (1:20).
- Pepperstone also publishes a tiered margin table for Bahamas retail clients, so check which tier your position size falls into.
- Margin is a deposit, not a loss limit: at 0.5% margin, a 0.5% adverse move consumes it. Pepperstone has no MAS licence.
Index CFD margin is the share of the position's value a broker holds while the trade is open, and it is simply the inverse of leverage: 1:200 means 0.5%, 1:20 means 5%. Below are Pepperstone's figures by client type, a worked example, and what margin does not protect you from.
At Pepperstone: 0.5% on major indices for Singapore retail clients
Singapore residents open accounts with Pepperstone Markets Limited in the Bahamas, whose published retail limit on major indices is 1:200, a margin requirement of 0.5%. That applies to the big benchmarks Pepperstone offers such as US500, NAS100, US30, GER40 and UK100, all priced without commission. The low requirement leaves more of your balance free as a buffer, which is how we suggest using it. Pepperstone's tiered margin table for Bahamas retail clients sets the rates per instrument, so look up the index you plan to trade before you size the position.
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Margin by Pepperstone entity and client type
| Entity and client type | Major indices | Minor indices |
|---|---|---|
| Bahamas (SCB), retail: serves Singapore | 0.5% (1:200) | Check the margin table |
| Bahamas (SCB), professional | 0.2% (1:500) | 1% (1:100) |
| Australia (ASIC), retail | 5% (1:20) | 10% (1:10) |
| UK (FCA), retail | 5% (1:20) | Not in our data |
| UAE site, retail | 0.5% (1:200) | 1% (1:100) |
Worked example: one US500 position, three margin rates
Say you buy US500 with a position value of $20,000. At the Bahamas retail rate of 0.5% the broker holds $100. A professional client at 0.2% would put up $40. An Australian retail client at 5% would need $1,000. In all three cases a 1% fall in the index costs $200. With $300 in the account at 0.5% margin, that loss leaves $100 against a $100 requirement, and a little more movement puts you at risk of being closed out. With $1,500 in the account, the same move barely registers. The margin rate decides how much you must post; the account balance decides how much room you have.
What margin does not protect you from
- Stop-out: when equity falls far enough below the requirement, positions are closed automatically. Pepperstone's stop-out level is not in our data; XS publishes a 40% margin call and 20% stop-out for comparison.
- Gaps: an index can open well away from Friday's close, skipping your stop.
- Margin changes: rates can rise for larger positions under the tiered table, and brokers can change them ahead of major events.
- Negative balance: Pepperstone's Bahamas terms say retail clients are not liable for negative equity; professional clients lose that automatic protection.
Sources
Pepperstone and XS published terms.
How do I convert leverage into margin?
Divide 1 by the leverage: 1:200 is 0.5%, 1:100 is 1%, 1:20 is 5%.
Why do Singapore clients get lower margin than Australian clients at Pepperstone?
Singapore residents are served under the Bahamas licence (1:200 on major indices), while Australian clients fall under ASIC's 1:20 retail cap.
Does Pepperstone charge for margin?
Margin is held, not charged. Costs are the spread and, if you hold overnight, financing.
Is Pepperstone regulated by MAS?
No. It holds no MAS licence; Singapore clients contract with its Bahamas entity.
Low margin means high leverage, and high leverage can wipe out an account quickly. CFDs are complex products; this page explains published margin terms and is not investment advice.