Special Miscellaneous Account

special miscellaneous account (SMA)

An account in which balances in excess of the amount required under Regulation T are placed. Funds in an SMA may be used to purchase more securities on margin or they may be withdrawn in cash. Suppose a customer purchases $10,000 of securities and puts up the minimum 50% margin required by the Federal Reserve under Regulation T. If the securities subsequently rise in value to $14,000, the new $7,000 loan value (50% of the market value) is $2,000 more than is currently borrowed on the securities. The $2,000 in the special miscellaneous account may be withdrawn in cash as a loan or it may be used to purchase up to $4,000 in additional securities. See also adjusted debit balance.

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Special Miscellaneous 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 those securities increase 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 miscellaneous 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.