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 burden of initial margin requirements is reduced to a degree by the possibility of netting potential moves in negatively correlated positions against each other.
Table 5 reports sample firms' securities holdings that could, in principle, be used to meet initial margin requirements.
The framework exempts physically settled foreign exchange (FX) forwards and swaps from initial margin requirements.
The framework also exempts from initial margin requirements the fixed, physically settled FX transactions that are associated with the exchange of principal of cross-currency swaps.
Earlier this year, the same benefits were made available for house accounts, which clearing members are using to reduce risk posed to CME Clearing and to significantly reduce their initial margin requirements.
Initial margin requirements for all index products have been reduced by half or more.
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.
He noted that, "these new listings permit approved portfolio margining customers to realize substantial savings on initial margin requirements for hedged positions utilizing broad based index futures.
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.
CME Cash with Interest Program Helps Meet Futures Commission Merchants' Initial Margin Requirements Using Cash as Collateral
PAA's margin balance including initial margin requirements totaled less than $70 million at June 30, 2008 and July 16, 2008.

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