A margin account in which the value of the assets purchased on margin falls below the maintenance requirement on the account. A margin account holder is required to maintain money or securities worth a certain amount in order to continue trading on margin; this rule exists to protect the broker from financing excessive and irresponsible trading. An undermargined account may result in a margin call or in the account becoming restricted.
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Of or relating to a brokerage account in which the dollar value of the margin (market value of the assets minus the amount owed) has fallen below the percentage of value set by the maintenance 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.