initial margin

The amount a futures market participant must deposit into his margin account at the time he places an order to buy or sell a futures contract. Also referred to as original margin. Chicago Board of Trade glossary

————

When a customer establishes a position, he is required to make a minimum initial margin deposit to assure the performance of his obligations. Futures margin is earnest money or a performance bond. The CENTER ONLINE Futures Glossary

————

(1) Amount of money deposited by both buyers and sellers of futures contracts to ensure performance of the terms of the contract; (2) amount of cash or eligible securities required to be deposited with a broker before engaging in margin transactions. Bloomberg Financial Dictionary

————

See initial performance bond. Chicago Mercantile Exchange Glossary

————

The returnable deposit required by clearing houses when opening certain futures and options positions. Initial margin is usually calculated by taking the worst probable one day loss that the position could sustain, and can be paid in either cash or collateral. Dresdner Kleinwort Wasserstein financial glossary

————

The margin required to secure a new futures or options position. Exchange Handbook Glossary

————

The returnable collateral deposited when initiating an open position. This is required by the clearing house from clearing members as protection against default of a futures or options contract. The exchange requires the level of initial margin set by the clearing house to be the minimum required by ( clearing) members from their clients. The level is subject to changes in line with market conditions. See margining. LIFFE

* * *

   The margin payment paid to a clearing house by both the buyer and the seller of a futures contract to protect against potential losses.

   ► See also Clearing House, Margin.