Margin Accounts and Margin Requirements

What this video covers

• The two separate equity tests for every margin transaction: initial margin as the down payment to open the position, and maintenance margin as the ongoing equity floor
• The 50% federal initial margin for long marginable equity securities, and the 25% of current market value maintenance requirement under Financial Industry Regulatory Authority (FINRA) rules
• The purchase-cost exception to the $2,000 minimum-equity floor, and why a customer buying a $1,200 stock does not have to deposit $2,000 in cash
• The 150% total initial margin for short nonexempted equity securities: 100% from retained short-sale proceeds plus a 50% customer deposit, and how the exam tricks test takers on this distinction
• The two-tier short stock maintenance formula: $2.50 per share or 100% of current market value below $5, versus $5 per share or 30% of current market value at $5 or more
• The 10% maintenance for investment-grade non-equity debt, the 20% of current market value or 7% of principal for other listed non-equity debt, and the 7% flat for other exempted securities
• The 20% initial and maintenance margin for security futures contracts, and the 100% payment requirement for non-margin-eligible, nonexempted equity securities