An order by a brokerage for an account holder to deposit more cash or securities into a margin account when the value of the cash and securities currently in it falls below some defined percentage. FINRA requires that the maintenance margin must be at least 25% of the amount borrowed, while some brokerages require a maintenance margin of up to 50%. If the maintenance margin falls below this, what is a margin call futures account may be subject to a margin call. The investor marign either deposit more money in the account or sell off some of his assets.
In the futures market, margin has a definition distinct from its definition in the stock market, where margin is the use of borrowed money to purchase securities. A margin call is a demand from a brokerage firm to a customer to bring margin deposits up to the initial or original margin levels to maintain the existing position.
Margin is a critical concept for those trading commodity futures and derivatives in all asset classes. Futures margin is a good-faith deposit, or an amount of capital one needs to post or deposit to control a futures contract. whay The maParticipants in a futures contract are required to post performance bond margins in order to open and maintain a futures position.Futures margin requirements are set by the exchanges and are typically only 2 to 10 percent of the full futurs of the futures contract.Margins are financial guarantees required of both buyers and sellers of futures contracts to ensure that they fulfill their futures contract obligations.
This money is held by the exchange clearinghouse as long as the futures position remains open. Never miss a trending story with yahoo.comas your homepage. Every new tab displays beautiful Flickr photos and your most recently visited sites.
What is a margin call futures