Define: Margin

Business, Legal & Accounting Glossary

Definition: Margin


Quick Summary of Margin


Profit, seen as the ‘margin’ between revenue and expense. A set financial boundary for pricing or yield, or the amount required as security on a loan.



What is the dictionary definition of Margin?

Dictionary Definition


  1. Banking:
    1. The difference between the market value of collateral and the amount of the loan advanced against it. Also called a haircut.
    2. The percentage added to a market rate of interest or subtracted from a market rate of deposit, to provide a return to the bank.
  2. Commerce: Difference between the cost price and selling price of a product.
  3. Commodity trading: Difference between the spot price and forward price quoted for a commodity.
  4. Currency trading: Difference between the spot price and forward price quoted for a currency.
  5. Futures trading: Security deposit that buyers and sellers must place with the clearinghouse to guaranty they will perform as agreed (to make or take the delivery) on or before the futures contract’s expiration date.
  6. Securities trading: Difference between the amount of loan advanced by a stockbroker to a speculator and the current value of the securities deposited by him or her with the stockbroker as collateral.

Also:

  1. typography The edge of the paper that remains blank.
  2. The edge or border of any flat surface.
  3. figuratively The edge defining inclusion in or exclusion from of a set or group.

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Full Definition of Margin


The percentage of the selling price that will be profit, generally calculated as percentages. It helps measure how much the company keeps in earnings. For example, a 30% profit margin means the company has a net income of £0.30 for each pound of total revenue earned.

Margin is money borrowed from a broker for trading purposes. Brokers generally require additional disclosures for opening margin accounts, and charge interest when the margin is used. Margin is commonly expressed as a percentage; an account 150% on margin, for example, holds $150 worth of positions for every $100 of actual cash in the account. Maintenance margin, the amount of margin required to hold an existing position, is regulated by the exchange where the asset is listed and may differ from the initial margin mandated by the Federal Reserve. Margin requirements for holding positions overnight may be greater than margin requirements for opening and closing intraday positions.

Margin calls occur when an account falls below the minimum maintenance level of 25% (or higher if so stated in the broker’s margin agreement). Brokers will generally give the account holder a short period of time to reduce the margin in a manner of their own choosing. If the margin has not been sufficiently reduced, the broker will automatically liquidate positions at its own discretion.


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Examples of Margin in a sentence


This year’s gross profit margin isn’t very high due to excessive maintenance costs associated with the production line.
The company’s operating margin was so narrow that they couldn’t go through with the renovations required by the new environmental regulations, and they had to close.



Cite Term


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Margin. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. April 09, 2020 https://payrollheaven.com/define/margin/.
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Margin. PayrollHeaven.com. Payroll & Accounting Heaven Ltd. https://payrollheaven.com/define/margin/ (accessed: April 09, 2020).
American Psychological Association (APA):
Margin. PayrollHeaven.com. Retrieved April 09, 2020, from PayrollHeaven.com website: https://payrollheaven.com/define/margin/

Definition Sources


Definitions for Margin are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 15th February, 2020