Welcome to Margin Requirements, the unit that clears up the single biggest misconception on the futures side of the exam: futures "margin" is a good-faith performance bond, not a loan or a down payment. Its mechanics (who posts it, who sets it, and where a margin call restores your account) are tested again and again.
Exam Weight: Part 1 spans ~71% of the exam across Chapters 1-7 combined; the National Futures Association (NFA) does not publish per-unit weights.
Video Resources
What You'll Learn
In this unit, you'll cover:
- The Nature of Futures Margin: Why futures margin is a performance bond posted by both the long and the short, how it differs from a securities margin loan, and who actually sets and revises the levels
- Margin Calculations: How initial and maintenance requirements work, why a futures margin call restores equity all the way to the initial level, and how daily mark-to-market drives variation margin
- Alternative Calculations: Why a bona fide hedger and a spread trader each post lower margin than an outright speculator
Why This Matters
Series 3 candidates are training to work with commercial and speculative futures clients, and margin questions run through the whole exam. Two ideas do most of the work: futures margin is a deposit that guarantees performance (no borrowing, no interest, no ownership), and both sides of every contract post it. Get those straight and the calculation questions fall into place.
Let's start with the nature of futures margin.