Margin requirement

The margin requirement is the minimum amount the Federal Reserve, in Regulation T, requires you to deposit in a margin account before you can trade through that account.

Currently this minimum, or initial margin, is $2,000, or 50% of the purchase price of securities you buy on margin, or 50% of the amount that you receive for selling securities short.

In addition, there's a minimum maintenance requirement, a minimum of 25% and often more, of the market value of the securities in the account. The maintenance requirement is set by the New York Stock Exchange (NYSE), the National Association of Securities Dealers (NASD), and the individual brokerage firms.

Money or collateral deposited with a broker, clearing member or clearing organization intended to hold futures contracts and cover changes in the value of futures contracts. Margin is one way of dealing with credit exposure. Properly designed margining, along with effective clearing, has helped exchanges stay in business even as occasional large defaults occur.