Basic Terms5 min read

What is Maintenance Margin? Minimum Balance to Keep Positions Open

Maintenance margin is the minimum amount of equity you must maintain in your trading account at all times to keep your F&O or leveraged positions open. If your account equity falls below this level due to losses, you receive a margin call. If you do not restore the balance, the broker can close your positions.

When you open a position, you need initial margin, which is SPAN plus exposure for F&O. As the trade progresses, your account balance fluctuates with profits and losses. The maintenance margin is the floor below which your balance must not drop. It is typically lower than the initial margin, giving you some room for adverse moves before a margin call is triggered.

How is maintenance margin different from initial margin?

Feature	Initial Margin	Maintenance Margin
When required	At the time of opening a position	Throughout the life of the position
Amount	Higher (SPAN + Exposure)	Lower (typically SPAN only)
Purpose	Ensure adequate capital to take risk	Ensure ongoing ability to absorb losses
Consequence	Order rejected if insufficient	Margin call if balance drops below

What triggers a maintenance margin breach?

The most common trigger is MTM losses on your open F&O positions. If NIFTY futures move against you and the daily MTM debit brings your account below the maintenance margin, a margin call is triggered. The other trigger is a change in margin requirements by the exchange, which can happen when volatility increases.

How much buffer should you keep above maintenance margin?

Experienced traders typically keep 20% to 50% more than the required margin to absorb normal daily fluctuations without getting margin calls. The exact buffer depends on the volatility of the positions you hold, the number of positions, and your risk tolerance. Under-margined accounts face a constant risk of forced closure at the worst possible time.

F&O trading involves substantial risk. This article is for educational purposes only.

Frequently Asked Questions

Is maintenance margin the same for all F&O contracts?

No. Different contracts have different maintenance margin requirements based on their volatility. High-volatility stocks require higher maintenance margins. Index contracts like NIFTY and BankNIFTY typically have lower maintenance margins than individual stock contracts because index movements are generally smaller.

Does maintenance margin apply to equity delivery positions?

For standard delivery purchases where you pay 100%, maintenance margin is not relevant because you own the shares outright. It applies to leveraged positions like F&O trades and Margin Trading Facility (MTF) where you have borrowed capital or hold positions with partial margin.

Can I check my current maintenance margin requirement on my broker platform?

Yes. Most broker platforms display your current margin requirement, utilised margin, and available margin. Some platforms show the specific maintenance margin level for each position. Monitoring this regularly helps you stay ahead of potential margin calls.

What is the relationship between maintenance margin and margin call?

Maintenance margin is the threshold. When your equity drops below this threshold, a margin call is the action triggered. Think of maintenance margin as the line on the wall and margin call as the alarm that sounds when the water level rises above that line. Staying above the line means no alarm.

Can maintenance margin requirements increase suddenly?

Yes. During periods of high volatility, exchanges can increase margin requirements including maintenance margins. This happened during the COVID crash in March 2020 when margins were raised across the board. Sudden increases can cause margin calls even for traders who previously had adequate margins.

Investments in securities market are subject to market risks. This article is for educational purposes only and does not constitute investment advice.