| Characteristics | Underlying Securities | Derivative Securities |
| Definition | It is a loan provided by the brokerage firm to the investor for executing purchase transactions. This loan is secured by cash or stocks in the securities account. | It is a deposit made to ensure future payment obligations. |
| Margin Parties | Buyer only | Both buyer and seller |
| Cost | Interest is charged as per the regulations of each brokerage firm | None |
| Feature | Not mandatory Depending on the investor’s needs |
Mandatory.
For trading derivatives; both the buyer and seller are required to deposit margin for participation in futures contracts. |
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