About Commodity Trading Margin Requirements Margin Calls
Margin: The amount of money or collateral deposited
by a customer with his broker, by a broker with a clearing member, or by a
clearing member with the clearinghouse, for the purpose of insuring the broker
or clearinghouse against loss on open futures contracts.
The margin is not
partial payment on a purchase.
(1) Initial margin is the total amount of margin
per contract required by the broker when a futures position is opened;
(2)
Maintenance margin is a sum which must be maintained on deposit at all times.
If the equity in a customer's account drops to, or under, the level because of
adverse price movement, the broker must issue a margin call to restore the
customer's equity.
DHT: Margin Call
Margin Call:
(1) A request from a brokerage firm to
a customer to bring margin deposits up to initial levels;
(2) a request by the
clearinghouse to a clearing member to make a deposit of original margin, or a
daily or intra-day variation payment, because of adverse price movement, based
on positions carried by the clearing member.
