Buying power, also known as the trading limit, represents the maximum purchasing power available to accountholders for placing trades.
For cash account, the trading limit is determined by the sum of the settled cash balance and the unsettled cash balance in the account.
The settled cash refers to the amount of cash that is readily available for withdrawal or for use in purchasing financial products. It typically includes funds from the sale of financial products and currency conversions that have already been settled, meaning the transactions have been completed and the funds are no longer subject to any holds or restrictions.
The unsettled cash balance refers to the funds from recent transactions in a brokerage account that have not yet completed the settlement process. These funds are typically not available for withdrawal until the settlement is finalized.
The trading limit is specific to each currency held within the account. The settled and unsettled cash balance denominated in one currency, such as AUD, cannot be utilized as purchasing power in another currency, such as USD. You may elect to enter currency conversion transactions to increase the trading limit of the desired currency. The purchasing power of the desired currency will have been increased prior to the settlement of the currency exchange transaction.
It is always your obligation to meet the settlement obligations due from the trading activities. Should you rely on either the full or partial amount of the unsettled cash balance to initiate subsequent trades, the following scenarios may arise:
If the settlement date of the unsettled cash balance falls on the same day as or precedes the settlement date of the subsequent trades, the unsettled cash balance can be utilized to meet the settlement obligations of such trades; or
If the settlement date of the unsettled cash balance occurs after the settlement date of the subsequent trades, the unsettled cash balance cannot be used to fulfill the subsequent trades’ settlement obligations. In this event, TBAU will meet the settlement obligations on your behalf and will be considered to have issued a credit facility by providing credit to you to meet your settlement obligations.