In the futures market, traders can pay a small amount of money according to a certain proportion of the price of futures contracts as financial guarantee for the performance of futures contracts and participate in the trading of futures contracts. This kind of money is the futures margin. There are two kinds of transactions, trading margin and settlement reserve.
Under the time deposit system, there are two concepts of deposit: original deposit (deposit for opening an account) and maintenance deposit (maintenance deposit).
The original margin is the fixed minimum capital charged by the exchange for opening positions, while the maintenance margin is a certain discount of the fixed margin and is also fixed. For example, the original margin of Hang Seng Index futures is about 57,000 yuan/piece, and the maintenance margin is about 47,000 yuan/piece. The exchange will fine-tune it at any time according to market conditions. If the original margin minus the loss value is greater than the maintenance margin, the futures company will generally not close the position immediately when the customer suffers losses, and will only inform the customer to add the margin. However, if the original margin MINUS the loss value is less than the maintenance margin, the futures company will not only issue an insurance recovery notice, but also maintain the right to close the position immediately.
Time deposit is a product of history. Before electronic transactions are widely used, in order to quickly calculate and judge the risk status of customers, it is the only feasible method to adopt fixed margin, otherwise it will bring a lot of time-consuming calculation and dynamic judgment. In the era of electronic trading, customers can place their own orders, and the dynamic calculation of position margin is no longer a problem when the exchange mainframe and futures company server are large enough and fast enough. Therefore, commodity futures and stock index futures in emerging markets often adopt proportional margin system.