Futures maintenance margin Calculation

Maintenance Margin is the minimum amount of cash you need to have in your futures trading account in order to remain in a futures position.

Maintenance Margin - Introduction

Maintenance Margin, or also known as Maintenance Level or Minimum Margin Requirement, is the amount of money that you must maintain in your account in order to keep a futures position running. If your cash balance, or Margin Balance, falls below this level, you would receive the famous and dreaded "Margin Call", which is a notification from your broker to top up your margin balance with cash back up to its initial margin level.

This free tutorial shall explain in depth what Maintenance Margin is, how it is calculated and how it affects your futures trading. Read the full tutorial on futures margin.

What is Maintenance Margin in Futures Trading?

Maintenance Margin is one of three margin terms that all futures traders must understand. The other two being Initial Margin and Variation Margin.

Unlike Initial Margin and Variation Margin (which are cash that you actually pay), Maintenance Margin is really just a level below which you would need to top up cash (Variation Margin) in order to keep your futures trading position going. Maintenance margin isn't some amount of money you pay in order to "maintain" a futures position. In fact, maintenance margin is simply fanciful industrial term for "Minimum Cash Balance". Yes, whenever the cash balance deposited in your futures trading account drops below this "Minimum Cash Balance" due to losses, you would be asked to top up cash (Variation Margin), failing which the position will be forcefully closed.

Purpose of Maintenance Margin

The purpose of maintenance margin is really the clearinghouse's way of limiting their risk exposure to non-performing futures contracts. One of the reasons why futures traders can trade futures with confidence is that performance of each futures contract is guaranteed by the clearinghouse. Now, in order to make good such a guarantee, clearinghouses need a way of limiting their risk exposure as well and the whole margin system in futures trading is the answer.

By having futures traders deposit an initial margin when opening a new futures position, the clearinghouse is guaranteed that there are cash available so...

Maintenance Margin
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Self-Regulatory Organizations; ICE Clear Europe Limited; Order Granting ..  — Insurance News Net
ICE Clear Europe states that the changes to the Risk Policy amend the calculation of CDS initial margin requirements to comply with margin requirements under EMIR Article 41 and Article 24 of the implementing Regulatory Technical Standards. /5/ ICE ..

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