margin. The additional margin deposited is called variation mar- gin and it is an amount necessary to bring the margin in the account balance back to its initial margin level. Unlike initial margin, variation margin must be in cash, not interest-bearing instruments. If a party to a     1Individual brokerage firms are free to set margin requirements above the minimum established by the exchange.     futures contract receives a margin call and is required to deposit varia- tion margin fails to do so within 24 hours, the futures position is closed out. Conversely, any excess margin may be withdrawn by the user. Although there are initial and maintenance margin requirements for buying securities on margin, the concept of margin differs for securities and futures. When securities are acquired on margin, the difference between the securitys price and the initial margin is borrowed from the broker. The security purchased serves as collateral for the loan and the investor pays interest. For futures contracts, the initial margin, in effect, serves as a performance bond, an indication that the user will be able to satisfy the obligation of the contract. Normally, no money is borrowed.       SHORT-TERM INTEREST RATE FUTURES CONTRACTS   The more actively traded short-term interest futures contracts in the United States and the United Kingdom are described below.   U.S. Treasury Bill Futures The Treasury bill futures market, which is traded on the International Monetary Market (IMM) of the Chicago Mercantile Exchange, is based on a 13-week (3-month) Treasury bill with a face value of $1 million. More specifically, the seller of a Treasury bill futures contract agrees to deliver to the buyer on the settlement date a Treasury bill with 13 weeks remaining to maturity and a face value of $1 million. The Treasury bill delivered can be newly issued or seasoned. The futures price is the price at which the Treasury bill will be sold by the short and purchased by the long. For example, a Treasury bill futures contract that settles in 3 months requires that 3 months from now the short deliver to the long $1 million face value of a Treasury bill with 13 weeks remaining to maturity. The Treasury bill delivered could be a newly issued 13-week Treasury bill or a seasoned 26-week Treasury bill that has only 13 weeks remaining until maturity. As explained in Chapter 3, the convention for quoting bids and