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 BCBS-IOSCO margin requirement standards also leave it to
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.
As a result, Regulation T margin requirements have been left unchanged since 1974.
in project subsidiaries that have limited liquid resources available for contingent margin requirements.
Players are already concerned about another margin hike while the Shanghai Gold Exchange also increased its gold margin requirements for gold forwards overnight yesterday.
lt;span style="mso-spacerun: yes;">&nbsp; </span>Silver's margin requirement hike, therefore, dominated the broad global markets this past week.
He says imposition of an initial margin requirement "will severely curtail the use of uncleared swaps for hedging, which would disrupt key financial services, such as those that facilitate wider availability of home loans and corporate finance.
This deposit, required for each open trade on your account, is known as the margin requirement.
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.
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.
In response to this dramatic growth, the FSC recently announced new guidelines for margin FX aimed at improving investor protection, including a 5 percent margin requirement as well as additional disclosure and reporting requirements.