Margin requirement is a financial concept related to the minimum amount in collateral that the issuer of a financial security requests from the buyer, to hedge against the risk of adverse price movements or the buyer defaulting.In the foreign exchange markets, businesses or individuals who wish to enter a currency forward contract in order to protect their exposure to exchange rate volatility are normally requested to deposit a minimum margin requirement.It acts as a surety against transactional default and provides other parties to a transaction with confidence that the counterparty will fulfil its contractual obligations.The margin requirement in currency exchange is normally in cash, deposited in a margin account. It is usually a percentage of the total amount to be transacted.Should the margin requirement change – as is regularly the case in currency transactions as exchange rates change continuously – there is a margin call, whereby the counterparty must deposit the shortfall in order to meet the new margin requirement.