What Is a “Margin Call” and When Is It Triggered in the MTM Process?
A margin call is a demand from a broker or clearinghouse for a trader to deposit additional funds into their margin account. It is triggered during the MTM process when the equity in the trader's account falls below the maintenance margin level.
The purpose is to restore the account balance to the initial margin level, ensuring the trader has sufficient collateral to cover any further adverse price movements.
Glossar
Margin Call
Trigger ⎊ A margin call in cryptocurrency, options, and derivatives markets represents a broker’s demand for additional funds to bring an account back to the minimum required margin.
MTM Process
Calculation ⎊ This systematic procedure involves valuing all open derivative positions using the latest available market data, including spot prices and the prevailing implied volatility surface.
MTM
Valuation ⎊ Market-to-Market, or MTM, within cryptocurrency derivatives represents the continuous recalculation of the profit or loss on open positions based on real-time market prices, a practice critical for risk management and collateralization.