maintenance margin requirement

Maintenance margin requirement

A sum, usually smaller than but part of the original margin, that must be maintained on deposit at all times. If a customer's equity in any futures position drops to or below, the maintenance margin level, the broker must issue a margin call for the amount at money required to restore the customer's equity in the account to the original margin level. Related: Margin, margin call.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Maintenance Margin

The money or securities an investor keeps in a margin account in order to be able to borrow from a brokerage for short sales or other purposes. The maintenance is kept as collateral until the brokerage calls the margin and the client pays back what is owed. FINRA requires that the maintenance kept must be at least 25% of the amount borrowed, while some brokerages require maintenances of up to 50%. See also: Restricted account.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

maintenance margin requirement

The minimum equity in an account as a percentage of the value of the account. For example, if the maintenance requirement is 25%, the account equity (the market value of the securities minus the amount owed) must equal at least one-quarter the value of the securities in the account. The maintenance margin requirement becomes important when securities purchased on margin fall in price. Also called margin requirement, minimum maintenance. See also house maintenance requirement, initial margin requirement.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
However, the minimum maintenance margin requirement for the account is 25%, meaning that the customer's equity must not fall below $15,000 ($60,000 market value multiplied by 25%).
To meet the maintenance margin requirement, the brokerage firm must sell four times the amount of the call ($2,000 maintenance margin call / 25% maintenance margin = $8,000).

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