Exchange Margin

Exchange Margin is the minimum collateral amount mandated by a stock exchange that a trader must maintain in their account to hold open positions in derivatives (futures and options). Set by exchanges like NSE and BSE using the SPAN (Standard Portfolio Analysis of Risk) methodology, exchange margins cover the potential worst-case loss on a position over a defined period. Failure to maintain the required exchange margin triggers a margin call, and if not met promptly, the broker may square off the trader's positions to prevent further losses.