Margin Trading

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Investors may only open one trading account, when the account is not a discretionary account, at the same business premises of the financial definition trading account securities broker.

An offshore foreign institutional investor may open more than one investment trading account at the same securities broker premises including branches where his status falls under the Operation Directions for Applications by Overseas Chinese, Foreign Nationals, and Mainland Area Investors for Registration to Invest in Domestic Financial definition trading account or Trade Domestic Futures.

Domestic professional investors may also open multiple accounts at the same securities broker premises where his status falls under rule 19 of the Regulations Governing Securities Firms. Overseas Chinese or a financial definition trading account national wanting to open an account for the trade of securities must be above the age of 20 and shall register with Taiwan Stock Exchange.

Please see the website for more information regarding the registration process and required documentation at: Upon discovering that an investor falls in any of the following categories, a securities broker shall refuse to open an account to, or, if an account has already been opened, refuse to accept orders for brokerage trading or subscription of securities: Incapacitated persons without legal capacity or with limited legal capacity, who do not have the agency or authorization of their legal guardian.

Personnel or employees of the Competent Authority in charge of securities matters without a letter of consent. Employees of the TWSE without a letter of consent.

Persons declared bankrupt and whose rights have not been reinstated. Interdicted persons who are not represented by their statutory agents. Juristic persons opening accounts that cannot supply proof of authorization to financial definition trading account the account.

Securities dealers who have not been approved by the Competent Authority. A principal who has engaged a director, supervisor, or employee of a securities firm to open an account with such securities firm as an agent or representative of the principal. When more than one discretionary investment account has been opened at the same business premises of the same securities broker by the same principal with respect to the same authorized discretionary trader; provided, this restriction shall not apply to a principal that is a government fund such as a civil servant pension fund, labor pension fund, labor insurance fund, or financial definition trading account remittance and savings fund and that, when authorizing the same authorized discretionary trader for discretionary investment, may open, at the same business premises of the same securities broker, different discretionary investment accounts for different brokerage contracts.

Investor applying to transfer his discretionary account to regular account. Any person that has breached a contract relating to securities trading, where the TWSE or the Over-the-Counter Securities Exchange have notified all securities brokers of this fact, where the case has not been closed and less than five years have elapsed.

The contra orders of the margin trade and day trade on the notification day are not included. Any person that has violated the Securities and Exchange Act or been suspected of forging altering listed or OTC securities documents and has been under public prosecution, or has been adjudicated financial definition trading account guilty by a final and unappealable court judgment within the last five years.

Any person that has breached a futures contract where the case has not been closed and less than five years have elapsed, or that has violated future trading laws or regulations and has been adjudicated criminally guilty by a final and unappealable judgment of a judicial authority within the past five years. Besides, they could check the above information on the TWSE website of http: Its base year value as of was set at Stocks financial definition trading account newly listed companies are included in the sample from the first trading financial definition trading account of the next month following one full calendar month from listing; provided, stocks of listed companies converted into financial holding companies and listed companies transferred from OTC market are included in the sample from the day of financial definition trading account.

Stocks suspended from trading are included in the sample from the first financial definition trading account day of the next month following one full calendar month from reinstatement of normal trading; provided, stocks suspended from trading because of issuance of replacement shares due to capital reduction resulted from a corporate split are included in the sample from the day of resuming trading of the new shares.

Stocks which trading method is changed to "Full-Delivery" are excluded from the sample. TAIEX is characterized in which large cap stocks would have greater influence on the index than small-cap financial definition trading account. The per-share earnings are typically that of the company in the previous year. Investors could inquire the information about their trading accounts opened at different securities firms at archive of TWSE located at 3rd financial definition trading account of Taipei Tower from Monday through Friday, 9: A securities broker may financial definition trading account use its own capital or securities holding, or borrow funds or securities to settle transactions on financial definition trading account of its clients.

A "put warrant" offers its holder the investor the right financial definition trading account sell and a "call warrant" offers its holder the right to buy underlying equity at a predetermined price strike price on specified dates European styleor at any time, up to the end of a predetermined time period American styleor settle the difference in cash. You are advised against offering your account or providing any information thereof to any other person. We offer the following instances: It is a well known phenomenon that "big-lot players" in the market will attempt to entice investors, as part of a lucky draw contest, to give these players information regarding investors' financial definition trading account trading accounts; 2 bank accounts for payment transfer ; and 3 central depository accounts and use these accounts to place subscription orders participate in lot-drawingtransfer funds, and then sell the stocks won in lot-drawing to make quick profits.

You are advised against financial definition trading account others borrow your 1 trading accounts; 2 bank accounts for payment transfer ; and 3 central depository accounts as dummy accounts for subscription of stocks, as you will ultimately bear the risks of "default trade" and "evasion of gift tax" associated with this kind of scheme.

Pursuant to Clauses 3, 13, and 15 of Article 37 of Rules Governing Securities Firms as well as Clauses 7, 8, and 19 of paragraph 1 of Article 18 of Rules governing the Responsible Person and Associated Persons of Securities Firms, a securities firm and its employees shall not engage in the following conducts: The closing price shall be the price of trades matched upon accumulation of all trading orders over a period of time prior financial definition trading account market closing i.

Where unexecuted, the closing price shall be the last traded price during the current session. The trading orders shall be given in a single trading unit or multiples thereof. The trading unit of stocks shall be 1, shares of 10 dollar par value stocks. The trading unit of government bonds and corporate bonds shall be bonds with par value ofdollars. Where a portion of the principal of government bonds and corporate bonds has been paid, the trading unit shall be calculated based on its remaining financial definition trading account.

No, the trading of listed stocks shall be conducted in the Exchange except in the following situations: Transactions in government bonds. Due to the operation of laws, the transacting parties are unable to acquire or dispose of the ownership of the securities through trading on the centralized securities market.

Direct private transfer of securities not in excess of one trading unit, and the interval between two such transfers is not less than three months.

Other transactions in conformity with the regulations prescribed by the competent authority.

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Chapter 2 - Financial, managerial accounting and reporting Chapter objectives Structure of the chapter The basic principles Use of the accounting equation to find profit Manufacturing account Trading account The profit and loss account The balance sheet Stocks and work-in-progress The interpretation of company accounts-ratio analysis The main types of ratio Other useful ratios Financial measures of business unit performance Key terms The two principle statements which form a set of accounts are: Other less important statements are the manufacturing account and the trading account.

It is absolutely essential to any marketer to understand what the profit and loss statement and balance sheet mean. Both documents are vital, not only to show the corporate health of the organisation, but also as an indication to various shareholders of how well or badly the organisation is performing, as proof to potential investors or lenders for the raising of capital and as a statutory record for taxation and other purposes. Chapter objectives This chapter is intended to provide: Structure of the chapter This chapter is structured in a logical way, building up from the basic tenets of financial analysis - the dual effect and the accounting equation.

From this, the chapter looks at the construction of manufacturing, trading and profit and loss accounts and the drawing up of a balance sheet. Ratio analysis is a particularly powerful technique aimed at helping marketers to compare sets of figures over time and between companies. This is dealt with in considerable detail. The basic principles All aspects of accounts are governed by these two principles. Dual effect Every transaction has two effects, not one, e. If the Dairiboard Company of Zimbabwe sells milk to a retailer, it has: The accounting equation The second principle stems from the first.

Every transaction has two effects; these two are equal and balance each other. Thus, at any given moment the net assets of a business are equal to the funds which the owner or proprietor has invested in the business. Use of the accounting equation to find profit We normally arrive at a business's profit or loss by means of a profit and loss account, but where information about income and expenditure is lacking, the accounting equation can be a useful way of finding profit.

If three of these four amounts are known, the fourth can be calculated. Manufacturing account There are many firms, whether parastatal, sole trader, partnership or limited company, which manufacture the final product to be sold from raw materials, e. In this instance, a manufacturing account is required in order to arrive at the final cost of manufacture. The manufacturing organisation will still need a trading and profit and loss account.

The only major difference is that, in the trading account, the entry for purchases is replaced by the cost of manufacture. The cost of manufacture is calculated using a manufacturing account. Two important factors need to be taken into account: The main or direct costs are those of raw materials and labour which together are known as the prime cost, although any expense which can be traced directly to any unit of production is also a direct cost.

The indirect costs are those associated with production but cannot be traced directly to a particular production unit. These costs will include the general factory overheads such as light, heat and power, rent, rates, insurance, depreciation of production machinery, etc. Certain labour costs, such as supervision by foremen or factory managers, will also be indirect costs because they are not directly traceable to a production unit but are absorbed as a general overhead.

Rent and rates, x light, heat and power x Indirect wages x Depreciation of Prod. These adjustments can be seen in the pro forma manufacturing account which follows. Gross profit is the difference between the sale proceeds of goods and what those goods cost the seller to buy, or cost of sales. The cost of sales for this purpose includes the amount which has been debited for them to the purchases account plus the cost of getting them to the place of sale, which is usually the seller's premises, i.

Preparing a trading account The trading account is calculated by using a sequence of steps. It is essential that these steps are carried out in the order indicated. The opening stock is obviously the same as the closing stock of the previous period; in the first year of trading, of course, there will be no opening stock. Add the carriage to the total arrived at in c above.

This gives the total cost of goods available for sale. Any item deducted from the debit side of an account is, in effect, credited to the account. Deducting closing stock from the debit side of the trading account is therefore crediting it to that account. The corresponding double entry will therefore be to the debit of stock account: We have now arrived at the cost of sales.

The debit to stock account for closing stock is the value of the current asset of closing stock which will be included in the balance sheet, as we shall see later. When the opening stock is credited to the stock account in the next period, it will balance off the stock account. Net sales turnover and net purchases: Goods which have been returned by customers are represented by a debit balance on the sales return account. This must be transferred to the trading account, otherwise the sales and gross profit in that account will both be overstated.

Following the same reasoning that allows us to deduct closing stock on the debit side of the trading account, we may deduct the debit balance on the sales returns account from the sales credited in the trading account. In this way, we show the net sales for the year. Net sales are known as turnover. Similarly, we show the credit balance on the purchases returns account as a deduction from purchases in the trading account to show the net cost of purchases.

Goods which have been returned to suppliers must not be included in the cost of sales. The order of items is most important. Sales returns must be deducted from sales; purchases returns must be deducted from purchases; carriage inwards, if any, must be debited in the account before closing stock is deducted. A trading account is prepared very much like a manufacturing account but substituting the production cost of completed goods for the usual purchasing figure see exercise 2.

Now attempt exercise 2. Smith at 31 December 19X8. The remaining nominal accounts in the ledger represent non-trading income, gains and profits of the business in the case of credit balances, e. Debit balances represent expenses and losses of the business and are known as overheads, e. These must now be transferred to the profit and loss account so that we can calculate the net profit of the business from all its activities.

The profit and loss income statement presents a summary of the revenues and costs for an organisation over a specific period of time. Such a statement is generally developed on a monthly, quarterly and yearly basis. The profit and loss statement enables a marketer to examine overall and specific revenues and costs over similar time periods and analyses the organisation's profitability.

Monthly and quarterly statements enable the firm to monitor progress towards goals and revise performance standards if necessary. When examining a profit and loss statement, it is important to recognise one difference between manufacturers and retailers.

For manufacturers the cost of goods sold involves the cost of manufacturing products raw materials, labour and overheads. For retailers, the cost of goods sold involves the cost of merchandise purchased for resale purchase price plus freight charges. The balance sheet shows that the profit for an accounting period increases proprietor's funds.

The trading and profit and loss account shows, in detail, how that profit or loss has arisen. The profit and loss statement consists of these major components: Discounts received x Commission received x Rent received x x xx Less: The following provides an explanation. This is done by comparing sales to the costs which generated those sales.

A retailer, for example, will purchase various items from various suppliers, and add a profit margin. This will give him the selling price of the goods and this, minus the cost of goods sold, will be the gross profit. Cost of goods sold is calculated by: This gives the cost of goods which were sold. Sales and cost of goods sold should relate to the same number of units. Capital and revenue expenditure Only revenue expenditure e. The amount of revenue expenditure charged against the profits for the year or period is the amount incurred whether cash has or has not been paid.

This applies with sales as well. Even if cash for sales has not been received in the year or period under review, sales will be included in the trading account. This is the "accruals" concept. Capital expenditure is not charged to the profit and loss account as the benefits are spread over a considerable period of time.

The business started on 1 August 19X6. The following is a summary of the transactions for the first year: The balance sheet Introduction: The balance sheet is a statement of the financial position of a business at a given date. It is, therefore, only a "snapshot" in time. When comparing business performance, therefore, a number of years and time periods may be more suitable. The balance sheet is the accounting equation but set out in a vertical form in order to be more readily, understood i.

Capital at 1 January x Profit for the year x x Less: These are fixed accounts, current accounts, current liabilities and funds: They are normally valued at cost less accumulated depreciation. D Net current assets: This can also be called working capital.

F This total is the total of the business's net assets. G This total is the total of proprietor's funds, i. Within these main headings the following items should be noted. Prepayments are items paid before the balance sheet date but relating to a subsequent period. Accrued charges are amounts owed by the business, but not yet paid, for other expenses at the date of the balance sheet.