Collateral Margin

Collateral margin is the collateral that a trader or borrower deposits to open and keep open a leveraged position or secured loan. In derivatives and margin trading, it is the money or assets held in the account to cover possible losses; exchanges set an initial margin to open a position and a lower maintenance level below which a margin call or liquidation follows. The term is also used for the cushion by which collateral exceeds the amount owed: a loan of $70 against collateral worth $100 has a collateral margin of $30. Crypto exchanges accept cash, stablecoins or other coins as collateral margin, often applying a discount to volatile assets. A larger margin cushion reduces the risk of forced closure but ties up more capital. Also see Coin-Margined Trading.