Margin Call

A margin call happens when the equity in your brokerage margin account drops below the required maintenance level — FINRA’s own floor is 25% of the securities’ current value, though most firms set a stricter house requirement on top of that, often 30-40%. In plain terms: you borrowed to buy more than your cash alone covered, the value of what you bought fell, and the collateral backing that loan is no longer enough.

What makes a margin call different from almost every other “you’re behind” notice on this site is what your broker is allowed to do about it. It isn’t required to call you first, isn’t required to give you time to deposit more money even if it does call, and gets to choose which of your positions to sell — not you. It can also raise its own margin requirement at any point without warning, which can trigger a call on an account that hasn’t otherwise changed.

If the sale doesn’t cover what you borrowed, the shortfall becomes a debt you owe the brokerage directly — see Stock Margin Debt for how that deficiency balance is treated from there, including whether it’s dischargeable in bankruptcy.

Frequently asked

Does my broker have to warn me before a margin call turns into a forced sale?

No. The SEC's own investor guidance is explicit that firms aren't required to contact you before liquidating a margin account — most attempt to as a courtesy, but none are legally obligated to, and a firm can also raise its own house margin requirement at any time without advance notice.

Show more

— US Debt Compass Editorial Team

How much equity do I have to keep in a margin account?

FINRA Rule 4210 sets a 25% maintenance-margin floor for long equity positions, but most brokers set their own higher "house" requirement, commonly 30-40%. Falling below whichever number your broker actually uses is what triggers the call, not the FINRA minimum by itself.

Show more

— US Debt Compass Editorial Team