What Is a ‘Margin Call’ and How Is It Triggered by Marking-to-Market?
A margin call is a demand from the broker or clearing house for a futures trader to deposit additional funds into their margin account. It is triggered when the daily marking-to-market process causes the account equity to fall below the 'maintenance margin' level.
This deficit means the account no longer holds enough collateral to cover potential future losses. Failure to meet the margin call typically results in the mandatory liquidation of the trader's position to cover the losses.
