Distinguish between the following: 'Initial margin' and 'maintenance margin'.
CS Executive · Capital Markets & Securities Laws · PYQS · June 2016
Distinguish between the following: 'Initial margin' and 'maintenance margin'.
Answer & Explanation:
'Initial Margin' "Initial margin" means the minimum amount, calculated as a percentage of the transaction value, to be placed by the client, with the broker, before the actual purchase. The broker may advance the balance amount to meet full settlement obligations. 'Maintenance Margin' "Maintenance margin" means the minimum amount, calculated as a percentage of market value of the securities, calculated with respect to last trading day's closing price, to be maintained by client with the broker.
Topics: Derivatives Market
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