Margin Call Definition

Definition

A margin call is a demand for the customer to deposit cash or securities when an account does not meet an initial or maintenance margin requirement.

Why it matters on the Series 7

Series 7 margin questions test whether you can identify equity, debit or credit balance, Reg T requirements, maintenance requirements, and how market moves affect the account.

Example

If a long margin account falls below the required maintenance equity, the firm can require the customer to deposit additional funds or securities.

Common mistakes

• Using long-account formulas on short accounts.
• Confusing an initial Reg T call with a maintenance call.
• Forgetting that market value changes drive equity changes.