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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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%.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Possible approaches include making initial margin amounts static rather than dynamic and setting the levels low enough "to permit realistic pricing of uncleared swaps," it says, as well as allowing swap market participants covered by the rule to establish their own initial margin requirements and thresholds.

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