This article explains Partial Stop‑Out, sometimes referred to as partial liquidation.
What is a partial stop‑out?
A Partial Stop‑Out is an automated risk‑management process that may occur when your margin utilisation exceeds the permitted level.
Instead of triggering a full stop‑out, where all margin positions are closed, a Partial Stop‑Out aims to reduce or close only part of your positions in order to restore margin levels.
From a system and regulatory perspective, this process is sometimes referred to as partial liquidation. However, in client communication it is described as a partial stop‑out or partial closure of positions.
When can a partial stop‑out occur?
A Partial Stop‑Out may occur if, for any reason, your margin utilisation exceeds the permitted level.
In such situations, Saxo is required to reduce risk in order to protect both the client and the bank, in line with contractual terms and regulatory requirements.
What is the objective of a partial stop‑out?
The objective is to:
- Automatically reduce or close selected positions to bring margin utilisation back to an acceptable level
- Avoid a full stop‑out (full liquidation of positions) where possible
How the partial stop‑out process works
Are all positions treated in the same way?
No. Positions are assessed in predefined groups, primarily based on product type.
This means some positions may be considered for reduction or closure before others during a stop‑out process.
Which positions are reduced first?
Positions are generally considered in the following order:
- OTC derivatives and futures where there are no options on the same underlying
-
Listed derivatives, as well as OTC derivatives and futures where options on the same underlying exist
- Within this group, positions with larger margin requirements are prioritised
- Securities, for Lombard lending accounts
In general, positions in open markets are prioritised over closed markets.
Will positions be closed fully or only partially?
Depending on the situation:
- Positions may be partially reduced, or
- Closed in full
This is always done with the aim of reducing only what is necessary to resolve the margin breach and avoid escalation to a full stop‑out (full liquidation).
Can several product types be affected?
Yes. If required, a partial stop‑out may involve more than one product type, including:
- OTC derivatives
- Listed derivatives
- Securities (for Lombard lending accounts)
Open and Closed Markets
Does a partial stop‑out only apply to open markets?
Open markets are prioritised.
If this is not sufficient to restore margin levels, positions in closed markets may also be taken into account.
What should clients be aware of when closed markets are involved?
When positions in closed markets are included in a stop‑out process:
- Prices may change before the market reopens
- Margin levels may still be insufficient once orders are executed
- If necessary, further position reductions or closures may occur once the market opens
Can a partial stop‑out happen more than once?
Yes.
If margin utilisation remains above the permitted level after an initial reduction, additional stop‑out actions may follow until margin requirements are met or the process escalates.
Escalation to full stop‑out (Full liquidation)
Is a partial stop‑out always sufficient?
In many cases, a partial stop‑out is sufficient to restore margin levels.
However, if margin utilisation remains above required thresholds, the process may escalate to a full stop‑out, where remaining relevant positions are closed.
From a technical and regulatory perspective, this escalation corresponds to full liquidation.
How is escalation handled?
If margin levels are not reduced below system‑defined thresholds within predefined limits, the stop‑out process may escalate automatically to protect both the account and the bank, in line with contractual and regulatory requirements.