Markets Home

Active trader

Hear from active traders about their experience adding CME Group futures and options on futures to their portfolio.

Find a broker

Search our directory for a broker that fits your needs.

CREATE A CMEGROUP.COM ACCOUNT:

MORE FEATURES, MORE INSIGHTS

Get quick access to tools and premium content, or customize a portfolio and set alerts to follow the market.
Market Data Home

Real-time market data

Stream live futures and options market data directly from CME Group.

E-quotes application

Access real-time data, charts, analytics and news from anywhere at anytime.

CME DATAMINE:

THE SOURCE FOR HISTORICAL DATA

Explore historical market data straight from the source to help refine your trading strategies.
Services Home

Uncleared margin rules

Understand how CME Group can help you navigate new initial margin regulatory and reporting requirements.

Calculate margin 

Evaluate your cleared margin requirements using our interactive margin calculator.
Education Home

Now live: ESG solutions

Manage the risk associated with renewable energies, environmental change and sustainable investments.

Create a CMEGroup.com Account: More features, more insights

Get quick access to premium educational content, including expert-led webinars, a real-time trading simulator, and more.
      Course Overview
      • Definition of a Futures Contract
      • Learn About Contract Specifications
      • Understanding Contract Trading Codes
      • Get to Know Futures Expiration and Settlement
      • Tick Movements: Understanding How They Work
      • What are Price Limits and Price Banding?
      • About Contract Notional Value
      • Mark-to-Market
      • Margin: Know What's Needed
      • Understanding Futures Expiration & Contract Roll
      • Price Discovery
      • Calculating Futures Contract Profit or Loss
      • Understanding the Role of Speculators
      • Understanding the Role of Hedgers
      • Trading Venues (Pit vs. Online)
      • Midwest Grain Trade: History of Futures Exchanges
      • Futures Contracts Compared to Forwards
      • What is Volume?
      • Open Interest
      Introduction to Futures
      You completed this course.Get Completion Certificate

      Margin: Know What's Needed

        • Also available in:

        • English
        • 简体中文
        • 한국어
        • עברית

      Video not supported!

      Understanding Margin

      Securities margin is the money you borrow as a partial down payment, up to 50% of the purchase price, to buy and own a stock, bond, or ETF. This practice is often referred to as buying on margin.

      Futures margin is the amount of money that you must deposit and keep on hand with your broker when you open a futures position. It is not a down payment and you do not own the underlying commodity.

      Futures margin generally represents a smaller percentage of the notional value of the contract, typically 3-12% per futures contract as opposed to up to 50% of the face value of securities purchased on margin.

      Margins Move with the Markets

      When markets are changing rapidly and daily price moves become more volatile, market conditions and the clearinghouses' margin methodology may result in higher margin requirements to account for increased risk.

      When market conditions and the margin methodology warrant, margin requirements may be reduced.

      Types of Futures Margin

      Initial margin is the amount of funds required by CME Clearing to initiate a futures position. While CME Clearing sets the margin amount, your broker may be required to collect additional funds for deposit.

      Maintenance margin is the minimum amount that must be maintained at any given time in your account.

      If the funds in your account drop below the maintenance margin level, a few things can happen: 

      • You may receive a margin call where you will be required to add more funds immediately to bring the account back up to the initial margin level.
      • If you do not or can not meet the margin call, you may be able to reduce your position in accordance with the amount of funds remaining in your account.
      • Your position may be liquidated automatically once it drops below the maintenance margin level.

      Summary

      Futures margin is the amount of money that you must deposit and keep on hand with your broker when you open a futures position. It is not a down payment, and you do not own the underlying commodity.

      The term margin is used across multiple financial markets. However, there is difference between securities margins and futures margins. Understanding these differences is essential, prior to trading futures contracts.


      Test your knowledge

      Related Courses
      /content/cmegroup/en/education/courses/introduction-to-futures/margin-know-what-is-needed
      • {{ course.name }}
      Previous Lesson
      Next Lesson
      Course Overview
      Get Completion Certificate
      Previous Lesson Next Lesson
      • YouTube
      • Twitter
      • Facebook
      • LinkedIn
      • Instagram
      • Rss

      CME Group is the world's leading and most diverse derivatives marketplace. The company is comprised of four Designated Contract Markets (DCMs). 
      Further information on each exchange's rules and product listings can be found by clicking on the links to CME, CBOT, NYMEX and COMEX.

      © 2021 CME Group Inc. All rights reserved.

      Disclaimer  |  Privacy Policy  |  Cookie Policy  |  Terms of Use  |  Data Terms of Use  |  Modern Slavery Act Transparency Statement  |  Report a Security Concern