Margin account

(redirected from Margin Accounts)
Also found in: Dictionary, Thesaurus.
Related to Margin Accounts: Margin trading, Buying on Margin

Margin account (stocks)

A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.

Margin Account

A brokerage account in which the brokerage lends money to the account holder, which the account holder then uses to buy securities. That is, a margin account is one in which an investor makes investments with borrowed money. This opens up investment opportunities that an investor might not otherwise be able to afford. More importantly, however, a margin account increases both gains and losses for the investor.Regulation T and other regulations require margin accounts to have money or securities kept as collateral. See also: Margin call, Maintenance.

margin account

A brokerage account that permits an investor to purchase securities on credit and to borrow on securities already in the account. Buying securities on credit and borrowing on securities are subject to standards established by the Federal Reserve and/or by the firm carrying the account. Interest is charged on any borrowed funds and only for the period of time that the loan is outstanding. Also called general account. Compare cash account. See also initial margin requirement, maintenance margin requirement.
Are there any advantages to opening a margin account as opposed to a cash account?

A margin account provides the flexibility to borrow funds using your securities as collateral. This can be an advantage if used properly. Funds from a margin loan can be used to purchase other securities, or they can be utilized for consumption. The risk is that a decrease in the market value of the account can create a "margin call," which requires the deposit of additional securities, the deposit of cash, or the liquidation of some securities held in the account.

George Riles, First Vice President and Resident Manager, Merrill Lynch, Albany, GA

Margin account.

Margin accounts are brokerage accounts that allow you a much wider range of transactions than cash accounts.

In a cash account you must pay for every purchase in full at the time of the transaction. In a margin account, you can buy on margin, sell short, and purchase certain types of derivative products.

Before you can open a margin account, however, you must satisfy the firm's requirements for margin transactions. You must also agree in writing to the terms of the account, and make a minimum deposit of at least $2,000 in cash or qualifying securities.

If you buy on margin or sell short, you pay interest on the cash or the value of the securities you borrow through your margin account and must eventually repay the loan.

Because both types of transactions use leverage, they offer the possibility of making a substantially larger profit than you could realize by using only your own money.

But because you must repay the loan plus interest even if you lose money on the investment, using a margin account also exposes you to more risk than a cash account.

References in periodicals archive ?
This may indicate that margin debt borrowers borrow more and buy more stocks in their margin accounts when the economy grows.
Maintenance of margin should be no less than 25 per cent of the market value of securities in the client's margin account anytime after the date of purchase.
To learn more about how to open a TradingBlock portfolio margin account, traders can visit www.
From any location in the world, Interbank FX account holders will be able to move money from their margin accounts into their debit account.
Investing in ProShares involves different fees and risks than maintaining a margin account.
Installation Foundation layer about 1,200 m3 - Create margin accounts 550 m - Create Perron edge is about 130 m - Installation sub-ballast mats and side approx 330 sqm - Installation gravel about 150 m3 - New cable channel about 400 m - Drainage (shafts) about 7 St.
However, if enough stock is taken out of street name or margin accounts, short sellers will have difficulty maintaining the current volume of short sales.
Of note was the talk from Tokyo traders and confirmed by data that Japanese retail FX margin accounts now have the largest JPY cross positions in a month or even longer in some cases.
Explaining in plain language the difference between cash accounts and margin accounts, how margin loan accounts work and what happens when investors are subject to a "margin call.
GBP/JPY traded to the highest since November with Japanese FX margin accounts caught short this cross.
In fact, approval for margin accounts at E*Trade did not include a review of credit history.