What Is the Relationship between Margin Requirements and the Leverage Ratio?

Margin requirements and the leverage ratio are inversely proportional. A higher leverage ratio means a lower initial margin requirement.

For example, 100x leverage requires only 1% initial margin (1/100). Conversely, 10x leverage requires 10% initial margin (1/10).

The margin requirement is the collateral needed, and the leverage ratio is the factor by which the position's notional value exceeds the collateral.