Key Takeaways
Direct answer: Futures margin is a performance bond, collateral posted to cover likely price swings in a position, not a down payment toward the underlying asset. Initial margin opens a position; maintenance margin is the equity floor the account must stay above while it is open. A margin call requires the account to be restored to the initial margin level, and a broker can liquidate positions without further notice if a call is not met, potentially leaving the account holder owing more than was deposited.
- Margin is typically a small percentage of a contract's notional value, which is the source of futures leverage.
- Accounts are marked to market daily; losses are debited in cash each day, which is what actually triggers a margin call.
- Exchange margin levels are minimums. Brokers can, and often do, require more.
- Futures margin is not governed by the stock market's Regulation T; it uses a separate, portfolio-risk-based methodology set by the exchange and its clearinghouse.
- Unmet margin calls can lead to forced liquidation and a deficit balance the account holder still owes.
Margin Is a Performance Bond
The word "margin" means something different in futures markets than it does when buying stock on margin. A futures margin deposit is collateral held by the broker and, ultimately, the exchange's clearinghouse, to guarantee that a trader can cover realistic daily price swings in an open position. It is not a partial payment toward eventually owning the underlying asset, and it is not interest-bearing borrowed money in the way stock margin debt is. This is why futures margin is more accurately described as a performance bond: it demonstrates the ability to perform on the contract's obligations, not a step toward completing a purchase.
Initial Margin vs. Maintenance Margin
Initial margin is the amount of collateral required to open a new futures position. Maintenance margin is a lower threshold, the minimum account equity the position must stay above once it is open. These are deliberately set at two different levels rather than one: maintenance margin gives an account some room to absorb ordinary daily price movement without triggering a call on every small loss, while initial margin sets a higher bar for opening a new position in the first place.
When the account's equity, after the day's mark-to-market, falls below the maintenance margin level, the broker issues a margin call. Meeting that call requires bringing the account back up to the initial margin level, not merely back above maintenance, which means a margin call can require depositing more new cash than the gap between current equity and the maintenance threshold alone would suggest.
How Daily Mark-to-Market Triggers a Call
Futures accounts are marked to market at the end of each trading day. The day's price change on every open position is calculated, and the resulting gain or loss is credited or debited in cash immediately, a process sometimes called variation margin. This is why a margin call can arrive well before a position's original thesis has had time to play out: the account must fund each day's loss in cash as it happens, not just settle up when the position eventually closes.
A position that would be profitable at some future date can still force a margin call, and a broker-initiated liquidation, if the path between now and then includes a stretch of daily losses larger than the account can fund. This path dependence is one of the most important differences between futures and an unleveraged, non-marked-to-market position in the same underlying asset.
What a Margin Call Actually Requires
A margin call is a broker's demand that additional funds be deposited to bring the account back to the initial margin level after equity has fallen below maintenance margin. If the trader does not, or cannot, meet the call within the broker's specified timeframe, which can be same-day during volatile markets, the broker is generally entitled to liquidate some or all of the account's open positions without further notice or consent, applying the proceeds against the shortfall. If the liquidation still leaves a negative balance, the account holder remains responsible for that deficit; a loss on a leveraged futures position is not capped at the amount originally deposited.
Exact notice periods, whether calls can be met with same-day wire transfers, and specific liquidation triggers vary by broker. Confirming these policies before they are needed, not while a call is already in progress, is a core part of the due-diligence workflow on Swoopr's Futures hub.
A Worked Example
The figures below are illustrative only, not a real contract's actual margin levels; confirm current requirements with your broker and the exchange. Suppose a hypothetical futures contract has a notional value of $250,000, an exchange initial margin of $15,000, and a maintenance margin of $12,000, and an account opens one contract by depositing exactly the $15,000 initial margin.
| Event | Account equity | Outcome |
|---|---|---|
| Position opened | $15,000 | Meets initial margin exactly |
| Day 1: $2,000 mark-to-market loss | $13,000 | Above $12,000 maintenance; no call |
| Day 2: additional $1,500 loss | $11,500 | Below $12,000 maintenance; margin call issued for $3,500, to restore equity to the $15,000 initial level |
| Call not met by deadline | $11,500 or less | Broker may liquidate the position without further notice; any remaining deficit is still owed |
Two trading days of losses totaling $3,500, just 1.4% of the contract's $250,000 notional value, consumed nearly a quarter of the $15,000 originally posted and triggered a margin call. This is the concrete version of the notional-versus-margin gap described on Swoopr's Futures hub and How to Read a Futures Contract pages.
Futures Margin vs. Stock and Crypto Margin
| Feature | Futures margin | Stock margin (Reg T) | Crypto derivatives margin |
|---|---|---|---|
| Set by | Exchange and clearinghouse, portfolio-risk-based methodology | Federal Reserve Regulation T minimum, plus FINRA/exchange maintenance rules | Individual exchange or platform policy |
| Typical margin as % of notional | Often a low single-digit to low double-digit percentage | Federal minimum around 50% of purchase price for an initial equity purchase | Varies widely by platform and chosen leverage tier |
| Settlement mechanic | Daily mark-to-market, cash settled each day | Interest accrues on the margin loan balance; not daily-settled the same way | Often continuous, near-real-time mark-to-market with automated liquidation |
Swoopr's existing Leverage and Margin in Crypto Derivatives guide covers the crypto-specific version of this mechanic in depth, including platform-specific liquidation engines; this page focuses on the CFTC-regulated futures market's version of the same underlying idea.
Broker Margin Can Exceed Exchange Minimums
The margin levels published by an exchange are minimums, not a universal requirement. A futures commission merchant, the broker that holds a futures account, can and routinely does require additional margin above the exchange minimum, based on its own risk policies, the specific account's history, the position's size relative to the account, or current market volatility. Brokers can also raise margin requirements with little advance notice heading into volatile events, which can itself trigger a call even without a change in the position's price. Confirm a broker's actual margin policy directly rather than assuming the exchange-published minimum is what will be required.
Common Mistakes
- Treating the initial margin deposit as the maximum possible loss on the position.
- Assuming exchange-minimum margin is what a broker will actually require.
- Not having a funding plan for a margin call before one occurs.
- Confusing maintenance margin with the target level a call must restore the account to; a call restores equity to the initial margin level, not just above maintenance.
- Assuming futures margin follows the same rules as stock margin under Regulation T.
Frequently Asked Questions
What is the difference between initial margin and maintenance margin?
Initial margin is the amount required to open a futures position. Maintenance margin is the lower threshold the account's equity must stay above while the position remains open; if daily mark-to-market losses push equity below maintenance margin, a margin call requires the account to be brought back up to the initial margin level, not just back above maintenance.
Can my broker require more margin than the exchange minimum?
Yes. Exchange-set margin levels are minimums. A futures commission merchant can, and routinely does, require additional margin above the exchange minimum based on its own risk policies, the specific account, or current market volatility, and can raise that requirement with little notice during volatile periods.
What happens if I do not meet a margin call?
A broker can liquidate some or all of an account's open positions without further notice if a margin call is not met, and the account holder remains responsible for any resulting deficit, including a loss larger than the funds originally deposited. Specific notice periods and liquidation triggers vary by broker and should be confirmed in the account agreement.
Is futures margin regulated like stock margin under Regulation T?
No. Stock margin in the United States is governed by the Federal Reserve's Regulation T and FINRA/exchange maintenance rules with statutory minimums. Futures margin is set by the futures exchange and its clearinghouse using a portfolio-risk-based methodology and is not subject to Regulation T, which is one reason futures margin requirements, as a percentage of notional value, are typically much lower than stock margin requirements.
Does posting futures margin mean I am borrowing money from the broker?
No. Stock margin is a loan against securities you own, and it accrues interest. Futures margin is collateral that stays yours, posted to demonstrate the account can fund likely daily price moves on the position. No cash is lent and no interest is charged on the position itself. That is why the percentages look so different from stock margin, and why a futures position can require additional cash daily even though nothing was borrowed to open it.
Who holds futures margin, the broker or the clearinghouse?
Both, in layers. A customer posts margin to the futures commission merchant holding the account, and the clearing member in turn posts margin to the exchange clearinghouse against the positions it carries. Customer funds for futures positions are held in segregated accounts under CFTC rules rather than mixed with the firm's own money. The layering is why the clearinghouse minimum and the amount a broker actually requires are two separate numbers.
Can margin requirements change while a position is already open?
Yes. Clearinghouses reset requirements as their volatility inputs change, and a futures commission merchant can raise its own requirement above that at short notice, including on positions already held. An account that was comfortably above the requirement can therefore be short of it without the position having moved at all. Holding cash beyond the current requirement is how traders absorb that possibility rather than being forced to reduce at an unplanned moment.
What is variation margin, and how is it different from initial margin?
Initial margin is the collateral required to open a position and is returned when the position closes. Variation margin is the daily cash movement that settles the day's gain or loss, so it is a real transfer rather than a deposit held aside. A losing day removes cash from the account permanently, not temporarily. Confusing the two is what makes a trader expect a rebound to restore the balance, when in fact only a later gain will.
Can excess equity above initial margin be withdrawn from a futures account?
Funds above the initial margin requirement are generally available to withdraw, subject to the broker's own policy and any hold periods it applies. The consideration is that the buffer is what absorbs the next adverse day without producing a call. Withdrawing down to the requirement leaves no room for ordinary daily settlement, so the account meets the minimum on paper while being one normal session away from needing funds.
Why do spread positions between two contract months often require less margin?
A calendar spread holds a long position in one contract month against a short position in another on the same underlying, so a move in the underlying tends to affect both legs in the same direction. Clearinghouse margin models recognize that offset and set a lower requirement than for two unrelated outright positions. The offset is not a guarantee: the relationship between the two months can widen or narrow on its own, and margin credit can be withdrawn if it does.