Who can engage in trading? Which body fixes the trading margins?

In the context of trading, various entities can engage in buying and selling financial instruments or commodities. These entities include:

1. Individual Traders: Individuals trade in financial markets using their personal funds to buy and sell stocks, bonds, currencies, derivatives, or commodities for speculative or investment purposes.

2. Institutional Investors: Institutional investors such as mutual funds, hedge funds, pension funds, and insurance companies trade on behalf of their clients or shareholders. They often have significant capital and employ professional traders to execute trades.

3. Banks and Financial Institutions: Banks and financial institutions engage in trading activities through their trading desks, which buy and sell financial instruments to manage risks, facilitate customer transactions, or generate profits.

4. Corporations: Corporations may engage in trading commodities, currencies, or financial derivatives to hedge against price fluctuations, manage currency risks, or speculate on market movements related to their business operations.

5. Brokers and Market Makers: Brokers and market makers facilitate trading by matching buyers and sellers in financial markets. They earn commissions or spreads on transactions executed on behalf of clients.

6. Exchanges and Clearinghouses: Exchanges provide platforms for trading financial instruments, while clearinghouses ensure the settlement of trades by guaranteeing the fulfillment of obligations between buyers and sellers.

Trading margins, also known as margin requirements, are set by regulatory bodies or exchanges to regulate trading activities and manage risks associated with leverage. Margin requirements specify the minimum amount of capital that traders must deposit or maintain in their accounts to cover potential losses.

In many countries, regulatory bodies such as securities commissions, central banks, or financial regulatory authorities establish and enforce trading margins for different types of financial instruments. Exchanges may also set margin requirements for trading on their platforms.

Margin requirements are typically based on factors such as the volatility and liquidity of the underlying assets, the size of the position, and the trader's level of experience and risk tolerance. By setting trading margins, regulatory bodies and exchanges aim to promote market stability, protect investors, and mitigate systemic risks associated with excessive leverage in trading activities.