The National Directory of Certified Public Accountants

Ask A CPA - Investments & Financial Planning

Who Sets The Initial Margin Requirement ?

The Initial margin requirement is when buying securities on margin, the proportion of the total market value of the securities that the investor must pay for in cash. The Security Exchange Act of 1934 gives the Board of Governors of the Federal Reserve the responsibility to set initial margin requirements, but individual brokerage firms are free to set higher requirements. With futures contracts the initial margin requirements are set by the exchange itself.

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