What is Initial Margin Requirement?
Initial Margin Requirement The minimum amount of collateral required to open a position in a derivatives contract, set by clearinghouses or regulators to cover potential future exposures from market movements.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Initial Margin Requirement” Used in Practice?
Clearinghouses calculate initial margin requirements to ensure adequate collateral is posted before derivatives trades are executed.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Initial Margin Requirement?
The minimum amount of collateral required to open a position in a derivatives contract, set by clearinghouses or regulators to cover potential future exposures from market movements.
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