Cash balance (or security deposit) required form a futures or options trader (see also Margin Call).

Margin Call
A request for extra margin when the balance in the margin account falls below a specified minimum level. Note the minimum margin demanded by the exchange/broker may vary from time to time depending upon market voliatility.

Market Liquidity
An expression used to describe the volume and size of transactions. A liquid market has a high volume of trades and large transaction sizes whereas an illiquid market has few trades, small in size. An illiquid market is characterised by wide bid/offer spreads, lack of transparency and large movements in price after any sizeable transaction.

Market Maker
A trader who is willing to quote both bid and offer prices for an asset.

Market Risk
Risk that cannot be diversified away.

To calculate the value of a financial instrument, or a portfolio of instruments, at current market rates or prices (this is normally done on a daily basis). Where the daily price is not transparent (eg in the case of OTC or illiquid instruments), the mark-to-market will be derived using the current value of the underlying asset.

Markov Process
A stochastic process where the behaviour of a variable in short period of time depends solely on the value of that variable at the beginning of the period, not on its past history.

Maturity Date
The end of the life of a contract.

Mean Reversion
The tendency of some market variables (eg commodity prices) to revert back to a long term average.

MegaJoule (MJ)
One million Joules. A unit of energy generally used in Gas markets. (refer to Joule )

MegaWatt (MW)
One million Watts (refer to Watt).

Metric Tonne
Standard unit of measure for many commodities. One Metric Tonne = 1,000KG or 2204.62 pounds (lbs)

Middle Distillates
Oil products in the boiling range 160-360 Degrees Centrigrade - ie between Gasoline and Heavy Fuel Oil. These include Gas Oil, Diesel, Heating Oil and Jet Fuel.

Millions of British Thermal Units .

Modified Duration
A modification to the standard duration measure so that it more accurately describes the relationship between proportional changes in bond prices and absolute changes in its yield. The modification takes account of the compounding frequency with which the yield is quoted.

Monte Carlo Simulation

A method of pricing derivatives, or assessing risk, by simulating the evolution of the underlying asset many times over. The average outcome of the simulation is an approximation of the derivative's value and the range of outcomes generates a probability distribution which is often used in Value-at-risk analysis.

Methyl Tertiary Butyl Ether, a compound used as a gasoline additive that improves car engine performance important for reformulated gasoline.

Multi Factor Model
Any model in which there are two or more uncertain parameters in the option price (single factor models only incorporate one cause of uncertainty - the future price).

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