What is Maintenance Margin?
Maintenance margin is the minimum account equity, expressed as a percentage of position notional, that a trader must maintain to keep a leveraged perpetual position open. If equity falls below this threshold, the exchange liquidates the position to prevent it going negative.
Maintenance margin (MM) is the floor beneath your position equity. When you open a perpetual futures trade, you post initial margin; as price moves against you, your equity erodes. The maintenance margin is the point — set as a percentage of position notional, often called the maintenance margin rate (MMR) — at which the exchange can no longer tolerate further loss and force-closes the position. It is always lower than the initial margin requirement, which is why a position can survive some adverse movement before hitting the liquidation threshold.
Exchanges apply MM through tiered risk models: the larger your notional, the higher the MMR, because big positions are harder to unwind without moving the market. A BTC position might carry a 0.5% MMR in the smallest tier and scale to 2.5% or more as size grows. Your effective liquidation price is derived directly from this rate — the higher the MMR, the sooner an adverse move wipes out your buffer. Maintenance margin is charged on the mark price, not the last trade, so a position is liquidated against the mark to avoid manipulation via thin last-trade prints.
For funding-rate arbitrage this matters more than it first appears. A delta-neutral funding trade holds a long on one venue and a short on another, aiming to harvest the funding spread while price exposure cancels out. But margin is calculated per venue, per leg — the two positions do not net across exchanges. If price runs hard in one direction, the losing leg can approach its maintenance margin and liquidate even though your combined book is flat. A liquidated leg turns a hedged carry trade into a naked directional bet at the worst possible moment.
Because of this, arbitrageurs size legs well below maximum leverage and keep collateral buffers far above the maintenance margin on each venue. The realistic edge on a funding trade is the annualized funding spread minus taker fees and slippage on both legs; that edge is thin, so a single liquidation from an under-margined leg can erase weeks of accrued carry. Understanding each venue’s MMR tiers, and modeling the price move that would breach them, is part of correctly pricing whether a funding spread is actually worth capturing.
Maintenance margin requirement
Maintenance Margin = Position Notional × MMR Notional = Position Size × Mark Price Liquidation occurs when: Account Equity ≤ Maintenance Margin
MMR = maintenance margin rate, a tiered percentage set per venue that rises with position size.
BTC long, 10x leverage, 1% MMR
- •Position: 1 BTC long at mark $60,000 → notional = $60,000
- •Initial margin at 10x = $60,000 / 10 = $6,000 (your posted equity)
- •MMR = 1% → maintenance margin = $60,000 × 0.01 = $600
- •Your equity can absorb loss down to $600 before liquidation.
- •Max adverse move ≈ ($6,000 − $600) / 1 BTC = $5,400
- •So liquidation ≈ $60,000 − $5,400 = $54,600 mark price (−9%).
- •In a funding arb, if this long leg is liquidated at $54,600, the paired short on another venue is now unhedged and directionally exposed.
Initial vs maintenance margin
| Property | Initial Margin | Maintenance Margin |
|---|---|---|
| When applied | At position open | Continuously while open |
| Purpose | Collateral to enter | Floor before liquidation |
| Relative size | Higher | Lower (a fraction of initial) |
| Set by | Chosen leverage | Venue MMR tier (by notional) |
| Breach triggers | Cannot open trade | Forced liquidation |
FAQ
What is the difference between initial and maintenance margin?
Initial margin is the collateral required to open a position and is determined by your chosen leverage. Maintenance margin is the lower ongoing minimum equity you must keep to avoid liquidation. A position can lose value down to the maintenance level before the exchange force-closes it.
How does maintenance margin cause liquidation?
As price moves against your position, your account equity falls. When equity drops to or below the maintenance margin (position notional × MMR), the exchange liquidates the position at the mark price to prevent your balance going negative.
Why does maintenance margin matter for funding arbitrage?
Margin is calculated per leg on each venue and does not net across exchanges. A sharp price move can push the losing leg to its maintenance margin and liquidate it, leaving the other leg unhedged. That single liquidation can erase weeks of harvested funding carry, so arbitrageurs keep large buffers above the MMR on both legs.
Does maintenance margin increase with position size?
Yes. Exchanges use tiered risk models where the maintenance margin rate rises as notional grows, because larger positions are harder to liquidate without market impact. A position that carries a 0.5% MMR in the smallest tier may face 2% or more at large size.
See maintenance margin live across 36 exchanges.
Open Funding Screener →