Good Student
Posts: 28
Joined: Fri Mar 11, 2016 11:38 am


Postby pooja923 » Wed May 18, 2016 5:24 am

If the margin falls below the maintenance margin, funds must be deposited to bring it back up to the maintenance
margin level or Initial margin level ??

Finance Junkie
Posts: 981
Joined: Wed Apr 09, 2014 6:28 am

Re: Equity

Postby edupristine » Wed May 18, 2016 6:08 am

Hi Pooja

Initial margin is that minimum amount of cash that must reside in the trader's trading account the first day that he establishes a futures position, whether long or short, and ranges from 2% to 20% of the market value of the futures position, although it can be less. Maintenance margin is that minimum amount of cash that must reside in the trading account the second day and every subsequent day so long as the trader continues to carry the futures position. Maintenance margin is usually less than initial margin, so the amount of cash one needs to carry a position is less than that required to establish the position.

If total equity in his account falls below the maintenance margin level, then he will be required to close open positions or to deposit additional funds in his trading account to bring the equity level back up to the initial margin level.

Return to “CFA Level I”



Global Association of Risk Professionals, Inc. (GARP®) does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine for FRM® related information, nor does it endorse any pass rates claimed by the provider. Further, GARP® is not responsible for any fees or costs paid by the user to EduPristine nor is GARP® responsible for any fees or costs of any person or entity providing any services to EduPristine Study Program. FRM®, GARP® and Global Association of Risk Professionals®, are trademarks owned by the Global Association of Risk Professionals, Inc

CFA Institute does not endorse, promote, or warrant the accuracy or quality of the products or services offered by EduPristine. CFA Institute, CFA®, Claritas® and Chartered Financial Analyst® are trademarks owned by CFA Institute.

Utmost care has been taken to ensure that there is no copyright violation or infringement in any of our content. Still, in case you feel that there is any copyright violation of any kind please send a mail to abuse@edupristine.com and we will rectify it.