Business, Legal & Accounting Glossary
If your account falls below minimum maintenance, your broker will issue a margin call for you to either deposit more or sell securities to correct the situation. In extreme cases, your broker may sell securities without contacting you first.
A call from a broker to a customer (called a maintenance margin call) or from a clearinghouse to a clearing member (called a variation margin call) demanding the deposit of cash or marginable securities to satisfy the Regulation T requirements and the house maintenance requirement for the purchase or short sale of securities or to cover an adverse price movement. also called federal margin call or Reg. T Call (for NASD requirements) or house call (for brokerage requirements).
A margin call is the demand by a brokerage that an investor contribute additional cash to a margin account.
The margin call may be mandated by Federal Reserve rules, such as Regulation T, although the NASD, the exchange, or even an individual brokerage may have tighter margin requirements that could trigger a margin call sooner. The margin call takes place when securities purchased on margin, decline below a certain amount, so the account no longer meets the maintenance margin. The investor will generally receive a margin call by phone. In the event a margin call cannot be met, the brokerage will sell securities held in account until margin requirement is met. Failure to meet a margin call can, therefore, result in a considerable loss. The margin requirement to initiate a trade on margin, called the initial margin, is higher than the maintenance margin so that small fluctuations in price do not typically trigger a margin call soon afterward. A margin call can often be satisfied with marginable securities in lieu of cash.
It is really disturbing to get a margin call and it often reminds you about school days when the principal called you in his office. This is because you are likely to hear bad news when you get a margin call. Margin call is common in commodities and other risky markets, so the forex market is not the exception.
When forex traders have low credit in their accounts then their forex pips contact them to improve their funding and to add more funds to their accounts.
You may get a margin call that will offer a good price on something and you will need to do quick research.
The margin call was made by the broker as instructed by the senior financial analyst who was his main point of contact at the firm.
I had to send out a margin call to him, and was shocked that he seemed perplexed and angry that I had done so, despite the rules being quite clear on the matter.
maintenance call
exhaust price
call
liquidate
writing cash-secured puts
maintenance call
settlement price
five hundred dollar rule
house excess
usable margin
sell out
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This glossary post was last updated: 21st November, 2021 | 0 Views.