Last updated: 2026-02-27
The Margin Rate determines the level of leverage available to a borrower. A lower Margin Rate generally allows for higher leverage, increasing the borrower's exposure to the underlying asset relative to their capital. Conversely, a higher Margin Rate generally results in lower leverage, decreasing the borrower's exposure to the underlying asset relative to their capital.
Leverage can amplify both returns and losses. When the value of the underlying asset increases, leverage can generate a greater return relative to the borrower's capital. However, when the value of the underlying asset decreases, leverage can generate a greater loss relative to the borrower's capital.
Significant losses can reduce the borrower's equity below the required margin level, triggering a Margin Call. If the required margin is not restored, the position may be automatically liquidated. Upon liquidation, the proceeds are first used to repay the outstanding loan and any accrued lending interest, with any remaining amount returned to the borrower.
© 2026 Margin System Corporation. All Rights Reserved.