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

See initial margin requirement, maintenance margin requirement, option margin.

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.

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References in periodicals archive ?
Since the margin requirement is similar for all eligible securities irrespective of residual maturity, the prevailing system does not differentiate the market risk across securities," the RBI said in a statement.
RBI revises initial margin requirement for liquidity collateral
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.
Margin requirement still hanging over derivatives users: as Dodd-Frank regulations are implemented, companies cite greater administrative burden and higher costs for derivatives, as well as a fragmenting market
(26) Additionally, prior to the passage of Dodd-Frank, OTC derivatives operated outside the purview of financial regulators and were not subject to the application of margin requirements that apply to exchange-traded derivatives.
International regulatory arbitrage resulting from Dodd-Frank derivatives regulation
Long Short Credit Debit Market Market Balance Balance Equity $100,000 $0 $0 $50,000 $50,000 To satisfy the margin requirement with stock, the customer must deposit marginable stock with a loan value of $50,000, i.e., a value of $100,000 ($50,000 maintenance margin call / 50% initial margin).
Chapter 42 Leveraging investment assets
Figure 1 (on page 4) gives margin requirements over this sample period.
Stock margins and the conditional probability of price reversals
There is considerable dispute over whether changes in margin requirements will indeed affect the stock market.
Margin regulation and stock market response: further evidence from the U.S. and some Pacific-Basin countries
Like the margin requirement, the capital requirement is subject to regulatory rulemaking.
Derivatives regulatory concerns of end users: what should treasurers do?
Furthermore, the 25% cash margin requirement, which had previously served as a deterrent, was altered to allow a mix of cash and shares to be deposited as margin instead.
STOCK MARKET AT A GLANCE
KARACHI, December 29, 2011 (Balochistan Times): Securities and Exchange Commission of Pakistans (SECP) has amended Securities (Leveraged Markets and Pledging) Rules, 2011, relaxing cash margin requirement to provide relief to margin trading system market.
SECP relaxes cash margin requirements
You will very likely have additional margin requirement compared with what you face now.
Dodd-Frank Regulations: Implementation, Compliance, Operational Readiness
Investors also are watching for potential gold margin requirement hikes from the CME Group, after the Shanghai Gold Exchange raised margins on some of its gold forward contracts twice this month.
Gold rebounds 1 pct ahead of Jackson Hole Fed meeting

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