Maintenance Margin Requirements
Chapters in this video
- 0:00 FINRA minimums: 25% long, 30% short
- 1:36 Long account trigger formula: debit balance divided by 0.75
- 3:47 Short account trigger formula: credit balance divided by 1.30
- 4:57 Surviving a maintenance call: liquidation rules
- 6:34 Reg T call versus maintenance call: timing and triggers
- 7:45 Rapid-fire exam recap
What this video covers
- Why FINRA requires 25% minimum maintenance equity for long accounts and 30% for short accounts, and why short selling carries theoretically unlimited risk
- How to calculate the exact trigger price where a maintenance call occurs using the debit balance divided by 0.75 formula for long accounts
- How to calculate the exact trigger price where a maintenance call occurs using the credit balance divided by 1.30 formula for short accounts
- What a broker-dealer can and cannot do when a customer fails to meet a maintenance call, including immediate liquidation rights and the prohibition against using another customer's account
- The timing difference between a Regulation T (Reg T) initial call, which gives until T plus 3 business days, and a maintenance call, which must be met promptly with no required grace period
- Why a restricted account (equity below 50%) does NOT trigger a maintenance call, and the exact equity floors that do trigger calls for long versus short positions
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