Why Is the Maintenance Margin Always Lower than the Initial Margin?
The maintenance margin is set lower to give the trader a buffer for price fluctuations after the position is opened, reducing the frequency of margin calls. The initial margin is higher to ensure a greater safety cushion for the exchange, reducing the risk of the position being liquidated at a price worse than the bankruptcy price and thus protecting the insurance fund.
Glossar
Initial and Maintenance Margin
Definition ⎊ Initial margin represents the minimum amount of collateral required to open a new leveraged position in a derivatives contract.
Maintenance Margin
Collateral ⎊ Within cryptocurrency derivatives and options trading, the maintenance margin represents the minimum equity a trader must maintain in their account to cover potential losses.