An account in which a customer uses credit from a broker/dealer to make purchases beyond the actual cash deposited in the account; the extension of credit by broker/dealers is regulated by the Federal Reserve Board.
brokerage account in which the brokerage lends the customer cash with which to purchase securities. see also Regulation T, broker loan, buying on margin, house maintenance requirement, hypothecation, rehypothecation, remargining, restricted account, investor's equity.
An account maintained by an investor with a brokerage firm in which securities may be purchased by borrowing a portion of the purchase price from the brokerage, or may be sold short by borrowing the securities from the brokerage firm.
Granted by a broker to an investor, margin accounts provide an automatic line of credit that an investor can use to fund up to 50% of a stock purchase. (Other types of securities have different margin limits.) Margin loans are paid back, plus interest, when the stock is sold. In many cases, margined positions must be backed up by collateral, usually a certain level of cash in the brokerage account.
An account enabling a market participant to trade futures contracts without having the full amount of funds available. Both counterparties (buyer & seller) are required to settle a downpayment to the brokerage firm or the clearing house of the futures exchange once a futures contract is concluded. This downpayment is known as the initial margin. The futures position is thereafter marked to market on a daily basis against closing prices and an unrealised profit or loss is calculated (Variation Margin). Should an unrealised loss be reported, the margin account will subsequently be reduced. Should the account fall below the minimum maintenance margin, the brokerage firm or exchange will make a margin or maintenance call to demand the counterparty to bring funds back to the required level. Opposite to Cash Account.
A brokerage account where a customer borrows money from the broker to pay for a percentage of the cost of securities. The money borrowed is the margin. The amount borrowed is restricted by the Federal Reserve and there is a charge for borrowing this money.
The minimum amount of cash or securities an investor has deposited with a broker to buy a security on credit. Investors usually do this when they are confident that the price of a security will go up. Rules of the Federal Reserve Board and NASD govern margin accounts. See shorting stocks.
A sophisticated customer account at a brokerage firm which allows an investor to buy securities with money borrowed from the broker. Margin accounts generally offer low interest rates on margin loans to encourage investors to buy on margin. The Federal Reserve limits margin borrowing to at most 50% of the amount invested, but some brokerages have even stricter requirements.
A client account in which a securities firm extends credit to the client to buy securities. The amount of credit that may be extended is governed by Regulation T of the Federal Reserve Board. Mutual fund shares that are on margin (being borrowed against) are held in a dealer controlled account.
A client account where he or she uses credit from the investment dealer to buy a security. The client needs to deposit a "margin" amount with the balance being advanced by the investment dealer against acceptable collateral such as investments. The investment dealer can make a "margin call" and demand that the client deposit more money or securities when the value of the account falls below a certain level. If the client does not meet the margin call, the dealer can sell the securities in the margin account at a possible loss to cover the balance owed. The client is also charged interest on the money borrowed from the investment dealer for the purchase of the securities.
A client account that uses credit from the investment dealer to buy a security. A client needs to deposit a margin amount with the balance advanced by the investment dealer against collateral such as investments. The investment dealer can make a margin call, which means the client must deposit more money or securities if the value of the account falls below a certain level. If the client does not meet the margin call, the dealer can sell the securities in the margin account at a possible loss to cover the balance owed. The investment dealer also charges the client interest on the money borrowed to buy the securities.
A brokerage account where the brokerage firm will lend money to help purchase securities. The loan in a margin account is collateralized by the securities in the account. If the value of the stock drops, the owner will be asked to either put in more cash, or sell a portion of the stock.
An account with a brokerage that allows customers to buy securities with money that they borrow from the broker. These types of accounts are governed by Regulation T of the Federal Reserve Board, the New York Stock Exchange, the National Association of Securities Dealers and by the rules of the brokerage house the customer has an account with. A margin agreement must be signed in order for a margin account to be established.
An account that allows leverage buying on credit and borrowing on currencies already in the account. Buying on credit and borrowing are subject to standards established by the firm carrying the account. Interest is charged on any borrowed funds and only for the period of time that the loan is outstanding.
An account with a brokerage, the nature of which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is guaranteed by the stock. If the value of the stock drops by more than a pre-set amount, the owner will be asked to either put in more cash, or sell a portion of the stock.
A brokerage account which permits investors to buy securities with money borrowed from the broker. The brokerage firm has the right to demand settlement of the account at any time and, if it deems necessary, can sell other securities held in the investor's account to repay the balance.
A brokerage account that permits the owner to borrow money to buy securities. Margin accounts should not be used by inexperienced investors, or those who are putting money at risk that they can't afford to lose. See The real, real risks of margin.
An account in which the firm lends the customer money on purchases or securities on short sales. Customers must have enough equity in the account to pay for purchases by the third business day after trade or meet obligations that may be incurred immediately.
A brokerage account that allows investors to buy securities by borrowing a portion of the purchase price. The National Association of Securities Dealers (NASD), the New York Stock Exchange (NYSE), and the lending brokerage firm govern margin accounts.
An account with which securities can be purchased by a combination of cash and loans. Such loans are collateralized by the security and, if the value of the security drops significantly, the owner will be asked to put more cash into the account or sell a portion of the security. Français: Compte de marge Español: Cuenta de margen, cuenta de adelantos
An account in which an investor can (but is not required to do so) buy securities on credit, using other securities held in the account as collateral. A margin account is required for all options trades.
A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.
A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock and, if the value of the stock drops sufficiently, the owner will be asked to either put in more cash, or sell a portion of the stock. Margin rules are federally regulated, but margin requirements and interest may vary among broker/dealers.
Brokerage account allowing customers to buy securities with money borrowed from the broker. Sales of margin accounts are governed by REGULATION T of the Federal Reserve Board, the National Association of Securities Dealers (NASD), and by brokerage firm house rules. A signed MARGIN AGREEMENT is a prerequisite to establishing a margin account.
An account with a brokerage firm that allows its clients to buy securities with money borrowed from the broker. Depending on the security, an investor can sometimes borrow up to 50% or more of the market value. Margin accounts are governed by Regulation T of the Federal Reserve Board, by the NYSE, and by the brokerage firm's house rules. Margin requirements can be met with cash, eligible securities, or any combination thereof. See: Margin; Margin Agreement; Regulation T
A special type of brokerage account which allows the client to pay a portion of the price of the securities and borrow the balance from the broker. The word "margin" refers to the difference between the market value of the stock and the loan which the broker makes against it.