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Topic: Margin call


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In the News (Thu 4 Dec 08)

  
  Margin call -- Facts, Info, and Encyclopedia article   (Site not responding. Last check: 2007-10-21)
A margin call is the demand, in a (An account with a securities brokerage in which the broker extends credit) margin account, for additional funds, additional money or securities, to be deposited into the account.
The margin call requires the account owner to bring the account value up to the minimum acceptable amount called the maintenance margin.
Margin calls occur on long positions when the value of held securities falls, and on (additional info and facts about short positions) short positions when the value of held securities rises.
www.absoluteastronomy.com /encyclopedia/m/ma/margin_call.htm   (187 words)

  
 Margin (finance) - Wikipedia, the free encyclopedia
In finance, a margin is collateral that the holder of a position in securities, options or futures contracts has to deposit to cover the credit risk of his counterparty.
Margin buying is buying securites with some own cash together with cash borrowed from a broker.
Return on margin (ROM) is often used to judge performance because it represents the gain or loss compared to the exchange’s perceived risk as reflected in required margin.
en.wikipedia.org /wiki/Margin_buying   (1301 words)

  
 TIAA-CREF Brokerage Services | Margin   (Site not responding. Last check: 2007-10-21)
Margin may be a useful tool in your investment strategy, but purchasing securities on margin involves significant risk and is not appropriate for everyone.
And, margin interest rates may be comparable to, or lower than, the prime interest rate, the rate offered by banks to their best business customers.
While an extension of time to meet a margin call may be available to you under certain conditions, you do not have a right to the extension.
www.tiaa-cref.org /brokerage/inved/margin.htm   (1244 words)

  
 Margin call
Margin calls are made by the clearing house on its members, who in turn call clients.
A margin call has two stages: the clearing house issues a statement to the clearing member early in the morning; the clearing member then contacts the clients concerned.
Margin call money must be lodged by a specified time, otherwise the member is in default.
www.anz.com /edna/dictionary.asp?action=content&content=margin_call   (225 words)

  
 ALTAVEST Margin Requirements for Commodity Futures
Initial margin is the deposit required to maintain either a short or long position in a futures contract, it is NOT a cost.
The maintenance margin is the amount of initial margin that must be maintained for that position before a margin call is generated.
If there were not excess funds in the account to automatically bring the initial amount back up to $1,000, that position would create a margin call situation and that margin call would have to be either immediately met with additional funds or the position would be liquidated.
www.altavest.com /margin_requirements.html   (137 words)

  
 TheStreet.com: Investors Challenging Brokers in Margin-Call Clashes
The wave of margin calls that accompanied April's stock slides will spawn a significant increase in legal challenges against brokerages, firing up a debate over whether investors are adequately told about their rights -- or lack thereof -- when they borrow money from their brokers to buy stocks, the lawyers predict.
Indiana investors' attorney Mark Maddox agrees, mostly because securities arbitrators, who are more likely to hear a margin case than a traditional court, may side with investors who've been sold out of holdings to satisfy a margin call if the brokerage's decision to do so is deemed unreasonable.
Margin rules are perhaps of greater interest to American investors now than at any other time, as securities buying on margin exploded to record levels early this year.
www.thestreet.com /stocks/brokerages/941748.html   (848 words)

  
 [No title]   (Site not responding. Last check: 2007-10-21)
The margin account is Marked-to-Market at the end of each business day, i.e., the brokerage firm calculates the actual margin of the account and compares it to the required maintenance margin.
When the margin percentage in the account is between the initial margin and the maintenance margin, the account is restricted.
Margin Example 4: Futures Margin Initial Position: Long position in 2 Gold Futures Contracts (@100 troy ounces/contract) Futures Margin is the "good faith" (or earnest money) deposit on a transaction to ensure the completion of a contract.
www.lehigh.edu /~rjk7/docs/course/fin323/handouts/Margin.doc   (870 words)

  
 Margin Trading
It's the siren song of buying on margin, and while it can be a great way to get a little more return than your cash would normally net you, it also can lead to a quick dunk in some hot water.
Margin accounts allow investors to buy a lot of shares with a relatively small amount of cash up front by using the assets currently held in their accounts as collateral.
Your equity in the account rises and falls as the price of the stock rises and falls but the debit balance remains the same -- except for the accruing interest, which is at an annual rate of anywhere from 8 percent to 10 percent at the moment -- until you repay the debit.
www.bankrate.com /brm/news/investing/20000301n.asp   (753 words)

  
 Investor Tips: Margin - Borrowing Money To Pay for Stocks
Before trading on margin, the NYSE and NASD, for example, require you to deposit with your brokerage firm a minimum of $2,000 or 100 percent of the purchase price, whichever is less.
The 25 percent is called the "maintenance requirement." In fact, many brokerage firms have higher maintenance requirements, typically between 30 to 40 percent, and sometimes higher depending on the type of stock purchased.
Under most margin agreements, even if your firm offers to give you time to increase the equity in your account, it can sell your securities without waiting for you to meet the margin call.
www.sec.gov /investor/pubs/margin.htm   (1409 words)

  
 Commerce Capital Markets Online Trading - Investment Glossary   (Site not responding. Last check: 2007-10-21)
Margin accounts are governed by Regulation T of the Federal Reserve Board, by the NYSE, and by the brokerage firm's house rules.
A Regulation T margin call is sent when a purchase is made and a maintenance margin call is sent when the margin account's equity falls below specific levels.
The adjustment may cause a margin call to be issued.
demo.pcinvest.com /commerce/ilMMa.htm   (1131 words)

  
 Margin Disclosure   (Site not responding. Last check: 2007-10-21)
A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities or assets in your account(s).
Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities or other assets in their accounts to meet the call unless the firm has contacted them first.
Most firms will attempt to notify their customers of margin calls, but they are not required to do so.
www.wpstrade.com /trading/margin.htm   (549 words)

  
 Margin Policy - CMS Forex
All margin conversions for non-USD denominated accounts are done in the same way as the default option, but this option represents maximum leverage of 100:1.
All margin conversions for non-USD denominated accounts are done in the same way as the default option, but this option represents maximum leverage of 40:1.
These margin requirements apply to all accounts, regardless of the currency in which the account is denominated.
www.cmsfx.com /en/why_cms/policies/margin   (742 words)

  
 AAII - American Association of Individual Investors
This is called “initial margin.” Assuming you do not already have cash or other securities in your account to cover your share of the purchase price, you will receive a margin call (or “Fed call”) from your firm that requires you to deposit the other 50% of the purchase price.
Some firms raise their maintenance margin requirements for certain volatile stocks, or a concentrated or large position in a single stock, to help ensure that there are sufficient funds in their customer accounts to cover the large swings in the prices of these securities.
As a result, your equity in the margin account is $50,000, and you have received a margin loan of $50,000 from the firm (see Table 1).
www.aaii.com /commentary/articles/200505_stockstrategies.cfm   (3371 words)

  
 Margin Call - FXMessage
Call it coincidence but any margin calls I have suffered are usually at 3am my time.
As you are aware I called your office several hours after the margin call had occurred and the question I asked was why had only some of the trades been closed.
Five minutes after calling you I sat and watched my balance decline by about 50k and also all my still active trades were closed and they now showed up in the activity log with time stamps very close to the margin call time.
www.oanda.com /products/msgboard/ubb/Forum17/HTML/000668.html   (8179 words)

  
 [No title]
Included in the terms of the customer agreement, the defendants reserved the right to make margin calls to secure account deficits at their own discretion and to liquidate plaintiffs' stock contracts at any time after plaintiffs failed to meet a margin call.
Because Exchange rules do not allow over-the-counter stock, such as the SNC stock, to be used to satisfy a margin call, the SNC stock had to be deposited in Moss's account and used as collateral for a loan from Bradford.
At no time on the morning that the accounts were liquidated was Moss informed by defendants that he must meet the margin call within a prescribed time or that the $65,000 he told Caulfield he was bringing would not meet the margin call.
www.ibiblio.org /pub/docs/nc-supreme-court/jul0693/bradford   (2053 words)

  
 NASD - Investor Information - Understanding Margin Accounts, Why Brokers Do What They Do
Many margin investors are familiar with the "routine" margin call, where the broker asks for additional funds when the equity in the customer’s account declines below certain required levels.
The broker’s calls are usually based upon the value of the account at market close since various securities regulations require an end-of-day valuation of customer accounts.
Margin is buying securities on credit while using those same securities as collateral for the loan.
www.nasd.com /web/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_005922&ssSourceNodeld=486   (1582 words)

  
 NASD - Investor Information - Purchasing on Margin, Risks Involved With Trading in a Margin Account
As a result, the customer’s equity in the margin account is $50,000, and the customer has received a margin loan of $50,000 from the firm.
Firms have the right to set their own margin requirements—often called "house" requirements—as long as they are higher than the margin requirements under Regulation T or the rules of NASD and the exchanges.
In today’s market, some firms have raised their maintenance margin requirements for certain volatile stocks (such as stocks of companies that sell products or services via the Internet) to help ensure that there are sufficient funds in their customer accounts to cover the large swings in the price of these stocks.
www.nasd.com /stellent/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_005927   (1376 words)

  
 WFN - Women's Financial Network at Siebert -- Margin Information
Margin loans typically have a lower interest rate than conventional bank loans or credit cards and there are no set-up costs or annual fees.
To fulfill a margin call you must raise your account’s equity to the minimum acceptable level by either selling securities, depositing cash, or depositing securities that are already fully paid for.
The interest charged for a margin loan is determined by the dollar amount borrowed on your account and is based upon the variable Brokers Call Rate.
www.wfn.com /home.asp?pageID=806   (294 words)

  
 Welcome to Stock Market Access   (Site not responding. Last check: 2007-10-21)
Margin Maintenance is higher for concentrated accounts and may vary per security.
A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account.
Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first.
www.keenanmail.com /services/margin_rates.html   (724 words)

  
 Money Digest: Volatility and margin calls: how you respond to a margin call depends on your planning, confidence and ...
Whether you use a loan to buy mutual funds or a margin account with a broker, a margin call is a demand to increase the value of the collateral in the account.
Instead of the margin call forcing you to sell at the worst possible time, it could cause you to buy more investments at one of the best possible times.
How you respond to a margin call ultimately is a measure of whether or not you were using leverage in a responsible manner and fully understood the downside.
www.findarticles.com /p/articles/mi_m0JQR/is_6_15/ai_30432067   (592 words)

  
 Campbell R. Harvey's Hypertextual Finance Glossary
Related to the lump-sum payments made when a loan or bond is called, equal to the NPV of future loan or coupon payments not paid because of the call.
The margin is the difference between the market value of a stock and the loan a broker makes.
The loan in the margin account is collateralized by the stock; 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.
www.duke.edu /~charvey/Classes/wpg/bfglosm.htm   (7763 words)

  
 Margin Trading - The Dreaded Margin Call
Second, the maintenance margin, which is the amount you need to maintain after you trade.
A margin call forces the investor to either liquidate his/her position in the stock or add more cash to the account.
This agreement explains the terms and conditions of the margin account, including: how interest is calculated; your responsiblities for repaying the loan; and how the securities you purchase serve as collateral for the loan.
www.investopedia.com /university/margin/margin2.asp   (459 words)

  
 TheStreet.com: Cold Calling: If You're Still on Margin, Calls May Come Without Warning
And that's good, because when it comes to margin calls, brokers have no duty to be coddling and communicative.
A margin call arises when an investor borrows money from the broker to buy stock, putting up the holdings as collateral.
At Fidelity, a margin situation automatically generates a snail-mail letter (unless the call is for an amount greater than the worth of the account -- that could mean swift liquidation).
www.thestreet.com /pf/funds/whatworks/1366718.html   (729 words)

  
 Day Trading   (Site not responding. Last check: 2007-10-21)
Pattern day traders must maintain a minimum equity of $25,000 in their margin account at all times or the account will be issued a day trade minimum equity call.
Time & tick is a method for calculating whether an account creates a day trade call using the time of the execution of the trades in the account.
If a day trade call of a pattern day trader is not met by the due date, the account is restricted.
personalmko.fidelity.com /products/stocksbonds/content/margin7.shtml   (1055 words)

  
 New Rules Explained
Currently a margin call is issued based on a position that is held overnight.
To calculate the amount of the margin call, you take the amount of the overage (in both cases above the overage is $160,000) and subtract the amount of your buying power, and divide by the margin level you have.
Because the Day Trading Margin Call requires funds to be deposited into your account to cover the margin call, you will have to monitor your account very closely, especially if you have to live by "Total Commitment".
www.itsinthecharts.com /PDTreport/NewRules.htm   (2766 words)

  
 FX Spot Market Margin Call - FXMessage
FXTrade automatically checks margin requirements every time you issue a trade and every time there is a price movement in a currency pair.
For accounts with 20:1 margin, when/if your margin availability declines to 4%, a warning will be issued via a pop-up window (only if you are logged in).
OANDA's margin call occurs when a trader's available margin drops below 2.5% for accounts with 20:1 margin ratio and at 1.66% for accounts with 30:1 margin ratio..
www.oanda.com /products/msgboard/ubb/Forum15/HTML/000793.html   (340 words)

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