Maintenance Margin
Maintenance margin is the minimum equity balance that must remain in a futures margin account. If accumulated losses drag the balance below this floor, the clearing broker issues a margin call requiring the trader to top the account back up to the initial margin level, not just to the maintenance threshold. Maintenance margin is typically set at $70\%$ to $80\%$ of initial margin and creates a buffer absorbing routine daily moves before any cash injection is triggered.
Why it matters
Initial margin is the full deposit at the start of the trade. Maintenance margin is the alarm level below which the broker stops tolerating further drift. The gap between the two is the day-to-day operating buffer that lets losing positions ride through normal price noise without constant cash transfers. Once the alarm trips, the rule is asymmetric. The trader must restore the account to the initial level, building back the full buffer rather than merely returning to compliance. This asymmetry exists to prevent the account from triggering another margin call the very next day.
Formulas
Worked examples
A trader posts initial margin of A$12,000 on a single SPI 200 futures contract. Maintenance margin is set at A$9,000. After three losing days the account balance falls to A$8,500.
Because A$8,500 is below the A$9,000 maintenance level, a margin call is issued. The trader must deposit $12{,}000 - 8{,}500 =$ A$3,500 to restore the account to the initial level, not just A$500 to clear the threshold. The new buffer of A$3,000 between initial and maintenance margin starts again.
A long position in CME E-mini S&P 500 futures has initial margin US$13,200 and maintenance margin US$12,000. After two days of losses the account holds US$11,400.
Balance below maintenance, so a margin call is triggered. Required deposit US$1,800. The trader can choose instead to close out the position, in which case the remaining balance is returned to them and no further deposit is needed.
Common mistakes
- ✗Top-up only needs to clear the maintenance level. The rule restores the account to initial margin. Topping up to maintenance would leave zero buffer and trigger another call almost immediately.
- ✗Maintenance margin is set by regulators. The clearing house sets both initial and maintenance margins on the exchange-cleared book, calibrated to product volatility. Brokers may layer additional house margin on top for client risk.
- ✗All exchanges use the same initial-to-maintenance ratio. The ratio is contract-specific. CME often uses 90 to 95 per cent for liquid contracts, whereas other venues may set tighter or looser ratios based on liquidity and volatility profiles.
Revision bullets
- •Minimum balance before a margin call is triggered
- •Typically $70\%$ to $80\%$ of initial margin
- •Restoration is to initial margin, not to maintenance
- •Distinct from variation margin (daily P&L flow)
- •Failure to meet a call leads to forced liquidation
Quick check
When the margin account balance drops below the maintenance margin, the trader must:
Initial margin = A$15,000. Maintenance margin = A$11,000. Account drops to A$10,500. The required deposit is:
Connected topics
In learning paths
Sources
- Hull, John C. Options, Futures, and Other Derivatives. 11th ed. Pearson, 2022. ISBN 978-0-13-693997-9.Defines initial margin, maintenance margin, and the asymmetric top-up rule for futures accounts.
- Australian Securities Exchange. Understanding Margins: ASX Clear and ASX Clear (Futures). ASX, 2023.Practitioner explainer of the relationship between initial and maintenance margin levels used at ASX Clear.
- CME Group. Margin Frequently Asked Questions. CME Group, 2024.Confirms standard industry practice of using maintenance margin around 90 to 95 per cent of initial margin for liquid contracts.