Margin (finance)

Written By: Ehsan Jahandarpour

In finance, margin is the collateral that a holder of a financial instrument has to deposit with a counterparty (most often their broker or an exchange) to cover some or all of the credit risk the holder poses for the counterparty. This risk can arise if the holder has done any of the following:
* Borrowed cash from the counterparty to buy financial instruments,
* Borrowed financial instruments to sell them short,
* Entered into a derivative contract.