Maintenance margin


Also found in: Dictionary, Thesaurus, Medical, Legal, Encyclopedia.
Related to Maintenance margin: margin call

Maintenance margin

For derivative contracts, when the margin drops below the maintenance margin, the investor gets a margin call. The investor must post margin to the initial margin (which is higher than the maintence) or the contract will be liquididated.

Maintenance 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 maintenance is kept as collateral until the brokerage calls the margin and the client pays back what is owed. FINRA requires that the maintenance kept must be at least 25% of the amount borrowed, while some brokerages require maintenances of up to 50%. See also: Restricted account.
References in periodicals archive ?
Zhao, "Setting of futures maintenance margin levels based on SV-M-POT-PSRM model: an empirical analysis on high-frequency data of CSI300 stock index futures," Journal of Systems and Management, vol.
The purpose of the maintenance margin level is to allow a certain amount of price movement that will naturally occur in markets so that a margin call is not made for every price movement.
(9.) One should not necessarily conclude that the correlations between returns from buying the straddles and buying the S&P 500 are positive because initial margins and maintenance margins are taken into account in computing the returns from selling straddles.
Where an investor's broker uses a safety margin in lieu of the industry's maintenance margin, the former should substitute for MM in Equation (1).
Subsequently, investors must maintain a specified minimum level of equity relative to the market value of the investment called the maintenance margin. The maintenance margin requirement is generally lower than the initial margin requirement.
They margin trading was approved after making some amendments to the system that decide the percentage of the initial margin and the maintenance margin, as well as following an in-depth study on the best systems and practices in global stock markets.
For futures contracts on the Standard & Poor's index of 500 stocks (S&P 500) and on the New York Stock Exchange Composite (NYSE) index, the pre-crash margin requirement on existing positions (maintenance margin) provided clearinghouses a lower level of protection against price moves than that provided in the stock (cash) market.

Full browser ?