Series 27: Initial Margin Requirements

Initial Margin Requirements

We have seen that the initial required margin for equity securities held in a margin account (other than exempted securities) is 50% of the current market value of the security. This includes convertible bonds. Regulation T allows the creditor and other regulators to set the initial margin requirement for non-equity securities (options and nonconvertible bonds) and exempted securities “in good faith.” We will see what this means shortly.

Exempted securities include government and municipal securities, bank-administered trust funds, and interests in securities issued by life insurance companies in connection w