In the futures markets,a maintenance margin call refers to:
A) funds paid to the clearing house by the brokers as insurance against losses.
B) funds paid to the clearing house by each trader to cover losses.
C) realised profits paid by the clearing house to traders.
D) the difference between the futures contracts price and the underlying asset.

Question

Quizplus · Accepted Answer

A maintenance margin call refers to additional funds that a trader must deposit into their futures account to meet the minimum margin requirements set by the exchange. This is done to cover potential losses that may occur due to adverse price movements in the futures position. The funds are paid by each trader to the clearing house, not the brokers, and are used to cover losses. Therefore, option B is the correct answer. Options A, C and D do not accurately describe a maintenance margin call.

In the Futures Markets,a Maintenance Margin Call Refers To