Maintenance Margin

Maintenance Margin

The minimum amount of equity that must be maintained in a margin account. In the context of the NYSE and NASD, after an investor has bought securities on margin, the minimum required level of margin is 25% of the total market value of the securities in the margin account. Keep in mind that this level is a minimum, and many brokerages have higher maintenance requirements of 30-40%. Also referred to as "minimum maintenance".

Notes:

As governed by the Federal Reserve's Regulation T, when a trader buys on margin, key levels must be maintained throughout the life of the trade. First off, a broker can't extend any credit to accounts with less than $2,000 in cash (or securities). Second, the initial margin of 50% is required for a trade to be entered. Finally, the maintenance margin says that an equity level of at least 25% must be maintained. The investor will be hit with a margin call if the value of securities falls below the maintenance margin.

See also: Broker's Call, Call Loan, Equity, Initial Margin, Leverage, Margin, Margin Account, Margin Call, Minimum Margin, Regulation T

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Maintenance margin

The dollar amount required to be kept at the OCC throughout the life of an option contract; percentage of the dollar amount of securities that must always be kept as margin.