<Dd> An investor is long 50 shares in Universal Widgets Ltd, trading at 120 pence (£ 1.20) each . The broker sets an additional margin requirement of 20 pence per share, so £ 10 for the total position . The current liquidating margin is currently £ 60 "in favour of the investor". The minimum margin requirement is now - £ 60 + £ 10 = - £ 50 . In other words, the investor can run a deficit of £ 50 in his margin account and still fulfil his margin obligations . This is the same as saying he can borrow up to £ 50 from the broker . </Dd> <P> The initial margin requirement is the amount of collateral required to open a position . Thereafter, the collateral required until the position is closed is the maintenance requirement . The maintenance requirement is the minimum amount of collateral required to keep the position open and is generally lower than the initial requirement . This allows the price to move against the margin without forcing a margin call immediately after the initial transaction . When the total value of collateral after haircuts dips below the maintenance margin requirement, the position holder must pledge additional collateral to bring their total balance after haircuts back up to or above the initial margin requirement . On instruments determined to be especially risky, however, the regulators, the exchange, or the broker may set the maintenance requirement higher than normal or equal to the initial requirement to reduce their exposure to the risk accepted by the trader . For speculative futures and derivatives clearing accounts, futures commission merchants may charge a premium or margin multiplier to exchange requirements . This is typically an additional 10%--25% . </P> <P> The broker may at any time revise the value of the collateral securities (margin), based, for example, on market factors . If this results in the market value of the collateral securities for a margin account falling below the revised margin, the broker or exchange immediately issues a "margin call", requiring the investor to bring the margin account back into line . To do so, the investor must either pay funds (the call) into the margin account, provide additional collateral or dispose some of the securities . If the investor fails to bring the account back into line, the broker can sell the investor's collateral securities to bring the account back into line . </P> <P> If a margin call occurs unexpectedly, it can cause a domino effect of selling which will lead to other margin calls and so forth, effectively crashing an asset class or group of asset classes . The "Bunker Hunt Day" crash of the silver market on Silver Thursday, March 27, 1980 is one such example . This situation most frequently happens as a result of an adverse change in the market value of the leveraged asset or contract . It could also happen when the margin requirement is raised, either due to increased volatility or due to legislation . In extreme cases, certain securities may cease to qualify for margin trading; in such a case, the brokerage will require the trader to either fully fund their position, or to liquidate it . </P>

His would also bring the leverage ratio from its initial value of