Margin

Business / Taxes / Margin: Margin is the minimum amount of collateral — in either cash or securities — you must have in your margin account to buy on margin, sell short, or invest in certain derivatives. The initial margin requirement is set by federal law and varies from product to product. For example, to buy stock on margin, you must have at least 50% of the purchase price in your account. After the initial transaction, maintenance rules set by the self-regulatory organizations, such as the New York Stock Exchange (NYSE) and NASD, apply. Under those rules, you must have a minimum of 25% of the total market value of the margined investments in your account at all times. Individual firms may set their maintenance requirement higher — at 30% or 35%, for example. If your equity in the account falls below the maintenance level, you’ll receive a margin call for additional collateral to bring the account value back above the minimum level.

Other Words for Margin

Margin Noun Synonyms: edge, border, perimeter, periphery, rim, lip, side, brink, verge
MORE

Margin Agreement

Business / Finance / Margin Agreement: The agreement governing customers' margin accounts. MORE

OTC Margin Stock

Business / Finance / OTC Margin Stock: Shares traded over-the-counter that can be used as margin securities under Regulation T. MORE

Margin Department

Business / Finance / Margin Department: The department in a brokerage firm that monitors customers' margin accounts, ensuring that all short sales, stock purchases, and other positions are covered by the margin account balance. MORE

Links
Home
Glossary
Thesaurus