Margin requirement


Also found in: Acronyms, Encyclopedia.

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.

Mentioned in ?
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.
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
Growth in margin borrowing due to easy margin requirement created bubble and enhanced volatilities in the equities market.
The dynamics of margin borrowing, holding period and Nasdaq index: lessons from the 1990's
To satisfy the margin requirement with stock, the customer must deposit marginable stock with a loan value of $50,000, i.
Chapter 42 Leveraging investment assets
As a result, Regulation T margin requirements have been left unchanged since 1974.
A review of regulatory mechanisms to control the volatility of prices
Market Responses to Federal Reserve Changes in the Initial Margin Requirement.
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?
allowing individual financiers and realigning margin requirements should be positive for KSE in our view.
STOCK MARKET AT A GLANCE
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.
Gold slides 3.5 pct as investors cash in gains
Other types of assets would not count towards meeting the margin requirement.
SEC requirements for posting of margins face opposition
On Monday, silver began to plunge because the Commodity Exchange raised the margin requirement for silver the previous Friday.
Silver proves financialization of commodities, dominates market in past week
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.
New Solution Created for Regulatory Margin Requirement
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).
INSURANCE: EU PLANS TO HARMONISE INSURANCE COMPANIES' SOLVENCY MARGINS

Financial browser ?
Full browser ?