A margin call is a demand to deposit additional funds or securities to cover possible losses. A margin call usually indicates that the collateral held for a given position has lost value. Let us imagine a situation where a ‘short’ EUR forward position is initiated, on which a 5% margin is requested. The position is ‘long’ USD 100,000 and the forward rate is EUR-USD 1.1111. Measured in EUR, the initial margin requirement is EUR 4,500 = 100,000 x 0.9000 x 0.05. If the forward rate moves to 1.1240, the forward position loses EUR 1,032.03. A margin call may be triggered if the ‘cover’ (the loss in proportion to collateral in deposit) falls below, say, 80%. This would be the situation in our example, as the ‘cover’ would be 77.07% = (4500 - 1,032.03)/4,500. An unheeded margin call on such a position may result in the automatic closing of the position at the prevailing market rate. That would happen if the ‘cover’ falls below, say, 60%.