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Margin (finance) In finance, margin is the collateral that a holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty. This risk can arise if the holder has done any of the following:
The maintenance margin for securities is set by each individual brokerage, and brokers may change these requirements at any time, though especially in volatile markets. So traders may need to add ...
Regulation T governs the extension of credit by securities brokers and dealers in the United States. [ 1] Its best-known function is the control of margin requirements for stocks bought on margin. The initial margin requirement for such margin stock purchases has been 50% [ 2] since 1974, [ 3] but Regulation T gives the Federal Reserve the ...
Money portal. v. t. e. In finance, a futures contract (sometimes called futures) is a standardized legal contract to buy or sell something at a predetermined price for delivery at a specified time in the future, between parties not yet known to each other. The asset transacted is usually a commodity or financial instrument.
Margin loan rates for small investors generally range from as low as 6 percent to more than 13 percent, depending on the broker. Since these rates are usually tied to the federal funds rate, the ...
The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ("SEC") in 1975 to regulate directly the ability of broker-dealers to meet their financial obligations to customers and other creditors. [ 1] Broker-dealers are companies that trade securities for customers (i.e., brokers) and for their own accounts (i ...
Portfolio margin. Portfolio margin is a risk-based margin policy available to qualifying US investors. The goal of portfolio margin is to align margin requirements with the overall risk of the portfolio. Portfolio margin usually results in significantly lower margin requirements on hedged positions than under traditional rules.
In the United States, margin requirements for all options positions, including a butterfly, are governed by what is known as Regulation T. However brokers are permitted to apply more stringent margin requirements than the regulations.
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