What is a margin call?

A margin call is the broker's demand that an investor deposit additional money or securities so that the account is brought up to the minimum value, known as the maintenance margin . A margin call usually means that one or more of the securities held in the margin account has decreased in value below a certain point.

What is maintenance margin?

Maintenance margin is the total amount of capital that must remain in an investment account in order to hold an investment or trading position and avoid a margin call. To better understand what a maintenance margin is, it’s important to review the underlying concepts of margin accounts and margin calls.

What happens if my brokerage account falls below maintenance margin?

If your account falls below the brokerage firm’s maintenance requirement, the firm will make a margin call and request that you add money or securities to your margin account. If you cannot meet the margin call, your brokerage will sell your securities until your account meets maintenance margin again.

What happens if margin requirements are not met?

The Federal Reserve Board sets the rules for margin requirements. If these requirements are not met, an account holder can receive either a maintenance margin call or a fed margin call.