After opening a position in an instrument such as futures, options, or margin accounts, an investor is required to maintain a minimum amount of collateral in their margin account with a broker or exchange. The maintenance margin's purpose is to ensure that the investor has enough funds to cover any potential losses caused by adverse market movements and to keep the account from falling below a certain level.
If the value of the investor's position decreases and the amount of collateral in their margin account falls below the maintenance margin level, the broker or exchange will issue a margin call requiring the investor to deposit additional funds to bring their account back up to the required level. If the investor fails to meet the margin requirement, the broker or exchange may liquidate the position to cover the losses.
The maintenance margin is typically expressed as a percentage of the notional value of the instrument being traded. The maintenance margin requirement is typically lower than the initial margin requirement because the investor has funds in their margin account to cover any initial losses that may occur. But even so, the broker or exchange can adjust the maintenance margin requirement based on market conditions and the level of risk associated with the financial instrument being traded.