Initial Margin


DEFINITION of 'Initial Margin'

The percentage of the purchase price of securities (that can be purchased on margin) that the investor must pay for with his or her own cash or marginable securities.

Also called the "initital margin requirement."

BREAKING DOWN 'Initial Margin'

According to Regulation T of the Federal Reserve Board, the initial margin is currently 50%. This level is only a minimum and some brokerages require you to deposit more than 50%.

For futures contracts, initial margin requirements are set by the exchange.

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  1. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  2. What are my options when I get a margin call?

    The two options available to an investor when he receives a margin call are to deposit additional funds to his trading account ... Read Full Answer >>
  3. What does it mean when I get a maintenance margin call?

    A maintenance margin call is a requirement to place more money into an account that is trading on margin to hold the current ... Read Full Answer >>
  4. Why does the Federal Reserve Board regulate which stocks can be bought on margin?

    One of the popular early explanations for the stock market crash in 1929 was that unregulated margin trading made the financial ... Read Full Answer >>
  5. What is the difference between extensive margin and intensive margin in economics?

    Trading on margin is not commonly done in stock trading except by professional investors and institutional traders. However, ... Read Full Answer >>
  6. What are the minimum margin requirements for a short sale account?

    In a short sale transaction, the investor borrows shares and sells them on the market in the hope that the share price will ... Read Full Answer >>

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