Margin call

Also found in: Dictionary, Thesaurus, Medical, Legal, Wikipedia.

Margin call

A demand for additional funds because of adverse price movement. Maintenance margin requirement, security deposit maintenance.

Margin Call

An order by a brokerage for an account holder to deposit more cash or securities into a margin account when the value of the cash and securities currently in it falls below some defined percentage. Every margin account has a maintenance margin requirement, which is money or securities an investor must keep in his/her margin account in order to be able to borrow from the brokerage. FINRA requires that the maintenance margin must be at least 25% of the amount borrowed, while some brokerages require a maintenance margin of up to 50%. If the maintenance margin falls below this, the account may be subject to a margin call. If the account holder is unable to make the necessary deposit, he/she must close out enough positions in order to make the deposit, or risk the account becoming blocked.

margin call

A call for additional funds or securities in a margin account either because the value of equity in the account has fallen below a required minimum (also termed a maintenance call) or because additional securities have been purchased (or sold short).

Margin call.

To protect the margin loans they make, brokers issue a margin call if your equity in your margin account falls below the required maintenance level of at least 25%.

If you get a margin call, you must deposit additional cash or securities to meet the call, bringing the balance of the account back up to the required level.

If you don't meet the call, securities in your account may be sold, and your broker repaid in full. For example, if you buy 1,000 shares on margin when they are selling at $10 a share, and the price falls to $7 a share, your equity would be $2,000 ($7,000 market value minus $5,000 loan is $2,000).

That's 28.6% of the market value. If your brokerage firm has a maintenance requirement of 30%, you would receive a margin call to bring your equity back to the required level -- in this case $2,100, which is 30% of $7,000.

You might also get a margin call if you trade futures contracts and the value of your account drops below the required maintenance level. However, margin requirements for futures are different than for stock.

References in periodicals archive ?
Sebastian Holding faced $511m in margin calls but the group claimed that Deutsche Bank put through these trades, unauthorised, and should not have been booked.
Nasdaq: TRAC) in New York and operator of the stock-trading system myTrack Hertz reportedly owed $45 million to four unidentified brokerage firms that made margin calls on his accounts.
The second reason why being a gold producer did not save Ashanti is that margin calls are due immediately, while most of its gold is still in the ground.
Dubai: Volatility in the UAE markets last week was partly triggered by margin calls.
In mid-June, when Moody's Investor Services downgraded the country's sovereign debt, it was noted that a further downgrade by DBRS could trigger collateral rules at the ECB that require margin calls on any loans backed by sovereign bonds.
Margin Call doesn't get too bogged down in the economics so we're able to follow the characters as they plot an escape plan.
The famously curvy star looked stressed and shockingly thin at the New York premiere of her latest movie, credit crunch thriller Margin Call.
Summary: Demi Moore and Kevin Spacey led an all-star cast promoting their new movie Margin Call at the Sundance Film Festival.
Burns told the Wall Street Journal it was the first time since 1987 that he's faced a margin call, and suggested, optimistically, that the market has reached bottom.
In April, the Congregation forwarded $500,000 to Newell to cover a margin call made by a securities dealer.
The adoption of the service will streamline Northern Trusts margin call process, increase transparency through automated collateral settlement tracking, enhance client service and improve custodian communications.