In China, futures margin (hereinafter referred to as margin) can be divided into settlement reserve and trading margin according to its nature and function. Settlement reserve is generally paid by the unit to the exchange according to a fixed standard, which is prepared in advance for transaction settlement. Trading margin refers to the actual margin paid by member companies or customers for holding futures contracts in futures trading, which is divided into initial margin and additional margin.
Initial margin is the money that traders need to pay when they open new positions. According to the transaction amount and margin ratio, that is, initial margin = transaction amount × margin ratio. At present, the minimum margin ratio in China is 5% of the transaction amount, which is generally between 3% and 8% internationally. For example, in Dalian Commodity Exchange, the discount rate of soybean margin is 5%. If a customer buys five soybean futures contracts (each 10 ton) at a price of 2700 yuan/ton, he must pay an initial deposit of 6750 yuan to the exchange.
In the process of holding positions, traders will have floating profits and losses (the difference between settlement price and transaction price) due to changes in market conditions, so the funds actually available in the margin account can be increased or decreased at any time. Floating profit will increase the balance of margin account, while floating loss will decrease the balance of margin account. The minimum balance that a margin account must maintain is called maintenance margin, which is equal to settlement price × position × margin ratio ×K(K is a constant, called maintenance margin ratio, which is usually 0.75 in China). When the book balance of the margin is lower than the maintenance margin, the trader must make up the margin within the specified time, so that the balance of the margin account is greater than or equal to the settlement price × position × margin ratio, otherwise the exchange or institution has the right to compulsory liquidation on the next trading day. This part of the margin that needs to be replenished is called additional margin. Still according to the above example, suppose that on the third day after the customer bought 50 cars of soybeans at the price of 2700 yuan/ton, the settlement price of soybeans fell to 2600 yuan/ton. Due to the price drop, the customer lost 5,000 yuan, and the balance of the customer's margin account was 1750 yuan. Since this balance is less than the maintenance margin, the customer needs to make up the margin to 6750 yuan, and the margin that needs to be made up is the additional margin.