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M

Margining

The margining system is the means by which the London Clearing House (LCH) controls the risk associated with a LIFFE clearing member's position on a daily basis. To achieve this, clearing members deposit cash or collateral with the LCH in the form of initial and variation margin. Initial margin is the deposit required on all open positions (long or short) to cover short term price movements. Deposits are returned by LCH to members when the position is closed. Variation margin is the members' profits or losses, which are calculated daily from the marked-to-market-close value of their open position. These amounts are credited to, or debited from their accounts. See Initial margin, Variation margin.

 

Market maker

Recognised financial institution or individual making buy and sell quotations in the secondary market.

 

Mark-to-market

The process by which contracts are revalued daily for the calculation of variation margin.

 

Market order

An order for immediate execution given to a broker to buy or sell at the best obtainable price.

 

Matching

The process by which trades are checked and agreed before transmission to LCH.

 

Maturity

The date on which the principal or nominal value of a bond becomes due and payable in full to the holder.

 

Money market

A wholesale market for the buying and selling of money. Money market paper is predominantly negotiable and traded just like any other product. Money market maturities extend out to one year.

N

Neutralising positions

Contracts with offsetting risk exposure.

 

Nominal value

The notional value of a futures or options contract for Exchange-traded derivatives (see also principal value when related to cash securities).

 

Non-Clearing Members (NCM)

Members who may make transactions in LIFFE contracts only if he has entered into a standard clearing agreement with a general clearing member, unless the Board otherwise prescribes. Otherwise he is able to transact such business only as a client of another member.