Special Memorandum Account (SMA)

What this video covers

• Why SMA is a bookkeeping entry (line of credit), not cash, and how to instantly eliminate the trap answer choice that calls it a cash balance
• How SMA increases through market value rises above Regulation T (Reg T), security sales, cash deposits, cash dividends, interest, and marginable securities deposits
• The exact math of buying power: 2 x SMA, and why the 50% Reg T requirement creates this multiplier
• Why SMA survives market declines and acts as a high-water mark, remaining unchanged even when the account becomes restricted
• Whether SMA can be used in a restricted account, and the 25% minimum maintenance boundary that Sam the supervisor enforces
• How SMA works in short accounts, where selling power also equals 2 x SMA and a falling short market value creates excess equity
• The prohibited uses of SMA: no breaking minimum maintenance, no use without compliance checking first, and no transfers between accounts