Special Memorandum Account

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Special Memorandum Account

The amount of extra money an investor is allowed to borrow on a margin account. Suppose an investor buys $20,000 worth of securities on margin and places securities worth 50% of the value of the amount as collateral (in this case, $10,000) as required by Regulation T. If that collateral increases in value to $13,000, the investor has an extra $3,000 in the margin account he/she did not previously have. This $3,000 is placed in the special memorandum account. The investor may use it for a loan of up to $3,000 or may use it to buy up to $6,000 more on margin. A special memorandum account is also called a special miscellaneous account.
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