Collection of Margin Deposits
Chapters in this video
What this video covers
- Why futures margin is a performance bond (good faith security deposit), not a loan or partial payment toward the commodity
- How securities margin differs from futures margin, and why "borrowing" or "financing" language always describes stock margin, not futures
- Which firm collects initial margin: only the carrying Futures Commission Merchant (FCM), because only the FCM custody's customer money
- Which firm issues maintenance and variation margin calls when equity drops below the maintenance level
- What held in segregation means: customer margin is walled off from the FCM's own operational funds and cannot be mixed with firm money
- Why the Introducing Broker (IB) collects and holds absolutely nothing related to customer margin or customer funds
- How to apply the money test on exam questions: the firm that holds the funds is always the firm that collects the margin and issues the calls
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