Margin Accounts

What this video covers

• The three parts of the margin agreement and which are mandatory: the credit agreement, the hypothecation agreement, and the optional loan consent agreement
• What hypothecation means: pledging securities as collateral for the loan
• Why the loan consent agreement is entirely optional and does not prevent a customer from opening or using a margin account
• The four brutal truths in the margin risk disclosure statement, including that the firm can sell securities without contacting the customer first
• Why a customer can lose more money than originally deposited when trading on margin
• The critical administrative distinction that cash accounts require no customer signature, while margin accounts strictly require a signed margin agreement before trading
• How the firm can change margin requirements at any time and liquidate any securities without the customer's permission or notice