equity investments

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

equity investments

Postby pradeeppdy » Sat Sep 22, 2012 8:16 am

If buyers receives the margin call, then security should bring back up to the maintenance margin or initial margin?
what are the works of clearing houses and security exchanges?

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content.pristine
Finance Junkie
Posts: 356
Joined: Wed Apr 11, 2012 11:26 am

Re: equity investments

Postby content.pristine » Sat Sep 22, 2012 3:10 pm

Hi Pradeep,

Whether the Account Balance should be brought to the initial margin or maintenance margin depends on whether this is an Equity or Derivatives account.
For Equity, the balance needs to be brought to the Maintenance Margin.
For Derivatives, the balance needs to be brought to the Initial Margin.

The security exchange keeps tracks of all the orders of market participants, and facilitates trades. You can say, this is the front end.

The Clearinghouse guarantees the trades by acting as a counterparty to each trade. It takes care of the risk management, margins or the mark to market part. You can say, this is the back end.

Hope this helps..
8-)

pradeeppdy
Finance Junkie
Posts: 258
Joined: Thu Sep 20, 2012 3:42 pm

Re: equity investments

Postby pradeeppdy » Sat Sep 22, 2012 9:37 pm

thanks


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