margining

margining
Fin
the system by which the London Clearing House (LCH) controls the risk associated with a London International Financial Futures and Option Exchange clearing member’s position on a daily basis. To achieve this, clearing members deposit cash or collateral with the LCH in the form of initial and variation margins. The initial margin is the deposit required on all open positions (long or short) to cover short-term price movements and is returned to members by the LCH when the position is closed. The variation margin is the members’ profits or losses, calculated daily from the marked-tomarket-close value of their position (whereby contracts are revalued daily for the calculation of variation margin), and credited to or debited from their accounts.

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  • margining — The margining system is the means by which the London Clearing House ( LCH) controls the risk associated with a LIFFE clearing member s position on a daily basis. To achieve this, clearing members deposit cash or collateral with the LCH in the… …   Financial and business terms

  • margining — present part of margin * * * margining (ˈmɑːdʒɪnɪŋ) [f. margin n. or v. + ing1.] Margins collectively; edging of a distinct colour or texture from the main body. In recent Dicts …   Useful english dictionary

  • margining — mar·gin || mÉ‘rdʒɪn / mɑːdʒɪn n. area between the edge of a page and the written or printed text; border, edge; boundary, limit; profit from the difference between costs and net sales v. set margins on typewriter or page; make comments in… …   English contemporary dictionary

  • Cross Margining — An offsetting position where market participants are able to transfer excess margin from one account to another account whose margin is under the required maintenance margin. Also known as spread margin . Cross margining allows a market… …   Investment dictionary

  • cross-margining — The practice employed when related positions are cleared by different clearinghouses. For example, someone may hold a position in IBM stock, a single stock futures contract on IBM, and an option on IBM stock. This lends the account to cross… …   Financial and business terms

  • cross margining program — A program that allows certain joint and affiliated clearing firms to receive margin credit for designated contracts across different clearing organizations. Chicago Mercantile Exchange Glossary …   Financial and business terms

  • gross margining — A method by which a clearing firm s customer margins are based on the firm s positions and applicable submitted spreads. For example, if a firm had only two accounts for two customers in its customer origin and one of those accounts had three… …   Financial and business terms

  • net margining — A method by which a clearing firm s margins are based on the net position, e.g. the remaining position after netting long positions in a contract against the short positions in the customer origin. For example, if a firm had only two accounts for …   Financial and business terms

  • Futures contract — Financial markets Public market Exchange Securities Bond market Fixed income Corporate bond Government bond Municipal bond …   Wikipedia

  • Options Clearing Corporation — Industry clearing Founded 1973 Headquarters Chicago, IL …   Wikipedia

  • Futures Equivalent — The number of futures contracts needed to be associated with a speculative option position. The futures equivalent can be calculated by taking the number of options and multiplying it by the previous day s risk factor (delta) for the same option… …   Investment dictionary

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