Business / Finance Topics |
Margin
Pronunciation
Highly liquid collateral required in order to cover adverse market price movements. The initial margin is calculated on the basis of a formula set by the counterparties to a trade or by a central counterparty (CCP). A market participant is called upon to provide additional collateral if the collateral that has been deposited is no longer sufficient (with this "margin call" indicating a shortfall in the margin coverage). (European Central Bank)