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good faith deposit

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Good faith deposit
Used in the context of commodities. Refers to the initial margin account deposit needed when buying or selling a futures contract; approximately 2%-10% of the contract value.
Used in the context of securities to describe the deposit required by securities firms engaged in transactions on behalf of a new client.
Also used to refer to the deposit with a municipal bond issuer by firms competing for the underwriting business.
good faith deposit
1. A sum of money required of an investor who is placing an order when that investor is not known to the brokerage firm. A good faith deposit ensures that the customer will follow through with proper payment for a buy order or with delivery of securities for a sell order.
2. A sum of money deposited by competing underwriters of a new municipal bond issue. The deposit is a relatively small proportion (usually under 5%) of the value of the issue being underwritten.
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``You have to have a $1 million good faith deposit before you can place a bid, so unless you've got a million bucks in your pocket, you can't come and buy us,'' he said.
KMART FINDS BUYER FOR BLUELIGHT.COM by Daily News (Los Angeles, CA)
When dealing with a portfolio lender, borrowers can typically lock rate by simply signing the application and putting up a refundable good faith deposit.
Borrowers may have more choices in today's lending market by Kra, David T. / Real Estate Weekly
Sunrise to buy Constellation's senior living assets," November 1999] Sunrise's good faith deposits in the amount of $1.
Sunrise calls off deal to buy Constellation properties by Contemporary Long Term Care
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