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%.
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In particular, Eurex Repos integrated GC Pooling repo market with straight-through processing across trading (Eurex Repo), central clearing (Eurex Clearing) and Tri-party settlement (Clearstream) allows for an operationally robust and secure management of cash variation and initial margin requirements.
JACKSONVILLE, Fla: FIS (NYSE: FIS), a global leader in financial services technology, announced that BNP Paribas has selected FIS' Cleared Derivatives Margin Advisor, an innovative solution that enables sell-side firms, investment funds and institutional investors to better assess and calculate initial margin requirements on cleared derivatives portfolios.
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. Variation margin on these derivatives should be exchanged in accordance with standards developed after considering the Basel Committee supervisory guidance for managing settlement risk in FX transactions.
regulations, presenting global companies with two sets of initial margin requirements.
Initial margin requirements are set by the Federal Reserve, maintenance margin requirement is determined by individual brokerage firms.
"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.
While an extension of time to meet initial margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
To be sure, experience with the effects of changes in securities margin requirements is both limited and dated (initial margin requirements on equities have changed only about twenty times since 1934 and have not changed at all since 1974).
Initial margin requirements in the stock market control the minimum margins that securities brokers and dealers must require of customers buying stocks on credit.
Clearinghouses have imposed high initial margin requirements, as well as price and position size limitations, suggesting a cautious approach thus far to trading cryptocurrency derivatives.

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