The percentage of the value of a transaction that a buyer or seller is required to deposit as a margin. Margin is required for many financial trades including short selling, and trading in derivatives. The margin is needed to protect the broker or exchange against loss if the investor defaults. ‘Buying on the margin’ is the act of borrowing from a broker to finance part of a security purchase. The investor has to finance part of the investment, and the assets purchased are held as collateral by the stockbroker.