Margin requirement


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Margin requirement

A performance bond paid upon purchase of a futures contract that protects the exchange clearinghouse from loss.

Margin requirement (options)

The amount of cash an uncovered (naked) option writer is required to deposit and maintain to cover his daily position valuation and reasonably foreseeable intraday price changes.

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.

Margin Requirement Options

The initial margin or maintenance margin that an investor must deposit with a brokerage as collateral in order to purchase options with borrowed money. The margin requirement for options is set by Regulation T, but some brokerages have higher requirements.

margin requirement

Margin requirement.

The margin requirement is the minimum amount the Federal Reserve, in Regulation T, requires you to deposit in a margin account before you can trade through that account.

Currently this minimum, or initial margin, is $2,000, or 50% of the purchase price of securities you buy on margin, or 50% of the amount that you receive for selling securities short.

In addition, there's a minimum maintenance requirement, a minimum of 25% and often more, of the market value of the securities in the account. The maintenance requirement is set by the New York Stock Exchange (NYSE), NASD, and the individual brokerage firms.

References in periodicals archive ?
The House of Representatives has passed bills exempting end users from margin requirements, but all of those measures ran aground in the Senate, where legislators seem reluctant to contemplate any measure that would alter Dodd-Frank.
Growth in margin borrowing due to easy margin requirement created bubble and enhanced volatilities in the equities market.
To satisfy the margin requirement with stock, the customer must deposit marginable stock with a loan value of $50,000, i.
As a result, Regulation T margin requirements have been left unchanged since 1974.
Market Responses to Federal Reserve Changes in the Initial Margin Requirement.
Like the margin requirement, the capital requirement is subject to regulatory rulemaking.
allowing individual financiers and realigning margin requirements should be positive for KSE in our view.
The CME has already hiked margin requirements for gold futures (earlier this month), throwing off smaller market participants and triggering a small price pullback," said VTB Capital analyst Andrey Kryuchenkov in a note.
Other types of assets would not count towards meeting the margin requirement.
On Monday, silver began to plunge because the Commodity Exchange raised the margin requirement for silver the previous Friday.
com)-- ActForex, Inc, the leading provider of independent retail Forex trading platforms, today announced the creation of Margin Requirement as a Percent of Trade Notional Value functionality, just in time for new regulations taking effect in Japan on August 1.
Supervisors would have increased powers to intervene early to take remedial action where policy-holders interests were threatened, for example in situations where an insurance undertaking currently satisfied the requirements but its financial position was deteriorating rapidly;* A higher solvency margin requirement would be established for certain categories of non-life business that have a particularly volatile risk profile (marine, aviation and general liability).