Who it's for — Anyone using a securities margin account, selling short, or trading futures and other leveraged products. The same word describes different mechanisms: identify the contract, intermediary and applicable rules before calculating anything.
Margin is a financial resource required to open or maintain an exposure, but it is not a universal measure of maximum loss. In securities markets it is tied to credit extended by the firm; in futures it is a guarantee deposit, or performance bond, supporting performance of obligations. Treating the two meanings as interchangeable creates errors about ownership, costs, calls and residual risk.
In plain terms — Buying stock on margin means financing part of the purchase with a loan secured by the securities. Opening a margined futures position does not mean borrowing the remainder of its notional value: the margin is a performance bond, and the account is credited or debited as the contract changes in value.
Securities and futures: what changes
| Dimension | Securities margin account | Futures |
|---|---|---|
| Economic relationship | the firm lends part of the purchase price; purchased securities serve as collateral | the performance bond supports performance across the clearing chain; at CME it is held for clearing-member obligations to customers and CME Clearing |
| Opening capital | customer equity under regulatory and firm requirements | initial margin required to initiate the position |
| Evolution | collateral value, debit balance, interest and other positions change account equity | contract gains and losses credit or debit the account |
| Maintenance threshold | minimum equity under regulatory and “house” requirements | minimum level that must be maintained in the account |
| Consequence of a deficiency | demand for funds and/or sale of assets under the agreement | margin call and restoration toward initial margin under the applicable rules |
For an account containing only long securities and a loan, in simplified form before interest and other costs:
account equity = market value of assets − debit balance
Equity is the customer's net capital, not the loan balance or just the original deposit. In this case, the margin percentage is equity ÷ current securities value; a deficiency is required equity minus available equity.
The actual test and eligible assets depend on regulation and the agreement with the firm. For futures, by contrast, the contract's notional value is not the portion “financed” by a loan: margin, point value and price movement work together, but they describe different quantities.
Example: equity, requirement and deficiency
Editorial example in dollars, with no interest, commissions or other positions: securities purchased for $20,000 using $10,000 of the customer's money and a $10,000 loan. Assume a house maintenance requirement of 40% of securities value; this is not a universal percentage.
| State | Securities value | Debt | Equity | Equity / securities | Required equity |
|---|---|---|---|---|---|
| Purchase | $20,000 | $10,000 | $10,000 | 50% | $8,000 |
| After the fall | $16,000 | $10,000 | $6,000 | 37.5% | $6,400 |
The deficiency is 6,400 − 6,000 = $400. A $400 contribution used to repay the loan reduces debt to $9,600 and raises equity to $6,400, if price is unchanged. The broker may instead sell assets under the account's rules: the example gives no right to wait for a deposit.
The calculation for a future differs. Assume initial account equity of $1,200, initial margin of $1,200 and maintenance of $1,000. A $300 loss leaves $900 of equity: restoring the initial level requires $300, rather than the $100 needed merely to reach maintenance. These are teaching amounts, not a contract's current requirements.
Initial and maintenance margin
Initial margin is the requirement that must be met when an exposure is opened or increased. Maintenance margin is the minimum level that must be maintained while the exposure remains open.
Falling below maintenance does not produce one identical automatic close-out in every market and account. It may trigger a margin call, an obligation to restore equity to a stated level, restrictions on new orders, position reduction or asset sales. Timing, firm discretion, reference price and the sequence of interventions are product- and contract-specific.
Within the FINRA framework, a firm may sell securities or other assets to cover a deficiency, including without first notifying the customer; the customer is not entitled to choose what is sold or to receive an extension. For futures, the CFTC and CME describe restoration to the initial level when the account falls below maintenance. CME also allows for position reductions or liquidation: a call does not guarantee that the broker waits for the deposit.
Changing requirements and residual deficits
The requirement is not necessarily stable. A brokerage firm may set stricter “house” requirements and, under the FINRA framework, raise them with immediate effect. CME states that performance-bond requirements vary by product and market volatility, and it publishes changes through its advisory service.
Liquidation does not guarantee that sale proceeds will eliminate a deficiency. A rapid move, gap, inadequate liquidity, costs and execution time can leave an amount still owed. FINRA expressly states that the customer remains responsible for any shortfall after a sale. The CFTC also warns that futures can leave a customer owing more than the amount initially invested. For example, selling securities for $9,000 against an outstanding $10,000 loan leaves $1,000 of debt before further costs. Therefore:
- margin deposited ≠ maximum loss;
- estimated liquidation price ≠ guaranteed execution price;
- margin call ≠ right to additional time;
- forced reduction ≠ final balance necessarily equal to zero.
Cross and isolated: venue-specific labels
Cross margin and isolated margin are not universal definitions across all brokers, exchanges or derivatives. In general, “cross” allows a broader pool of collateral and equity to support exposures within the same scope; “isolated” assigns an amount of margin to a position or compartment and restricts automatic transfers from other resources.
That general description does not override venue rules. In particular, “isolated” is not by itself a legal or economic guarantee that total loss is limited to the amount displayed in the interface. Check:
- which account, subaccount or portfolio defines the scope;
- whether additional margin can be transferred automatically;
- which price triggers a call, stop-out or liquidation;
- how gaps, fees, funding and losses beyond margin are handled;
- whether insurance, deleveraging or negative-balance rules apply;
- who remains responsible for any deficit.
Common mistake — Reading “isolated” as “I can lose only this amount,” or treating a liquidation estimate as a guaranteed stop. Both conclusions require an explicit contractual provision; the mode's label is not enough.
Margin, leverage and trade risk
Margin states how many resources are required to support an exposure; leverage compares exposure with capital; risk per trade estimates a loss under stated assumptions. They are not synonyms.
An initial margin of $1,000 for one contract does not imply that $1,000 is the maximum loss. Loss depends on price movement, multiplier, quantity, execution, costs and close-out rules. A stop is also an order instruction, not a universal guarantee of the execution price.
Pre-order check
- Structure: securities credit, futures performance bond or another contractual regime?
- Thresholds: initial, maintenance and house requirements, including the power to change them.
- Process: calls, timing, sale rights, priority and liquidation method.
- Scope: eligible collateral, netting, cross/isolated treatment and correlated positions.
- Residual: liability for deficits, interest, fees and applicable protections.
Bronze path — Risk module. Next: Liquidation. Index: Bronze path.
Sources
Sources accessed September 8, 2026. U.S. references do not set universal requirements for other markets.
SEC / Investor.gov, Understanding Margin Accounts — equity, borrowing, house requirements and interest.
CFTC, Economic Purpose of Futures Markets — “Margin”: performance bonds, settlement, maintenance and FCM requirements.
CFTC, Basics of Futures Trading — losses beyond initial capital.
CME Group, Margin: Know What's Needed — “Types of Futures Margin”: calls, reduction and liquidation.
FINRA, Brokerage Accounts — securities credit, initial and maintenance equity, house requirements and liquidation risks.
FINRA, Rule 2264 — Margin Disclosure Statement — sale without prior notice, changes to requirements and customer liability for a shortfall.
CME Group, Performance Bonds/Margins FAQ — futures performance bonds, initial and maintenance margin, account credits and debits, and requirement changes.