Initial margin

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Initial margin

(1) Amount of money deposited by both buyers and sellers of futures contracts to ensure performance of the terms of the contract; (2) amount of cash or eligible securities required to be deposited with a broker before engaging in margin transactions.

Initial Margin

The money or securities an investor keeps in a margin account in order to be able to borrow from a brokerage for short sales or other purposes. The initial margin requirement is kept as collateral until the brokerage calls the margin and the client pays back what is owed. FINRA requires that the initial margin requirement kept must be at least 25% of the amount borrowed, while some brokerages have initial margin requirements of up to 50%.
References in periodicals archive ?
The ISDA SIMM is a common methodology for calculating initial margin requirements on noncleared derivatives, and launched in September 2016 in response to new margin rules.
The burden of initial margin requirements is reduced to a degree by the possibility of netting potential moves in negatively correlated positions against each other.
The improvements will allow them to view their entire inventory and track each asset's location for those held in custody with it or outside, access eligible collateral for initial margin requirements, review and evaluate counterparty exposure and monitor potential future liquidity needs.
The framework exempts physically settled foreign exchange (FX) forwards and swaps from initial margin requirements.
regulations, presenting global companies with two sets of initial margin requirements.
The buy-side mainly uses one-directional trading so we will not get the benefits of netting trades, and consequently cannot offset the initial margin requirements as the banks can by having multi-directional trades," she said.
Initial margin requirements in the stock market control the minimum margins that securities brokers and dealers must require of customers buying stocks on credit.
The paper notes that for cleared portfolios, "Across the G14 dealers, initial margin requirements on IRS portfolios total $15 billion in an environment of low market volatility, rising to $29 billion if market volatility increased to medium and $43 billion if it increased to high.
It is the only industry-wide solution that directly addressed the initial margin requirements that went into effect in the U.
Initial margin requirements prior to October 15, 1934, were set by the industry.
This new research examines the detailed costs of imposing new initial margin requirements on all OTC interest-rate derivatives, whether cleared or not.
Kruse will be responsible for helping the industry prepare for the variation margin Big Bang on March 1, 2017, and the extension of initial margin requirements to phase-two entities in September 2017.

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