Confidence Margins

Initial margin requirements are set by

The recent rise in margin credit has focused attention on the Federal Reserve’s margin requirements for purchasing equities with borrowed funds, which has been at 50% since 1974. In November and December of 1999, margin credit grew very rapidly, outpacing the sizable appreciation in the overall stock market. And in January 2000, it grew further while the stock market’s valuation dropped, leaving the ratio of margin credit to market capitalization at its highest level in the past 29 years. This Economic Letter discusses the recent trend in margin credit and the merits of using margin requirements as a policy tool.

Buying stocks on margin

The Securities Exchange Act of 1934 mandated federal regulation of purchasing securities on margin. The margin requirement was motivated by the concern that credit-financed securities speculation helped fuel the run-up in stock prices prior to the stock market crash of 1929. The act viewed the Federal Reserve as responsible for managing the availability of credit in the economy, so the Fed was charged with setting margin requirements for securities purchases. The Securities Exchange Commission was directed to enforce those regulations.

Federal Reserve Regulations T and U govern the extension of credit by broker-dealers, banks, and other lenders to customers for the initial purchase of certain securities, including common stocks. The initial margin requirement represents the minimum amount of funds that investors must put up to purchase stocks on credit. For example, with a 50% initial margin requirement, an investor who wants to buy one share of ABC common stock valued at $100 per share must do so with at least $50 in her own funds or additional collateral. In other words, the maximum amount of credit an investor can obtain from the broker to purchase stocks is 50% of the stocks’ value.

FindingKing INRI Crucifix with St. Benedict Medal Gold Plated 3"
Jewelry (FindingKing)
  • This is a new gold plated Inri Crucifix with St. Benedict medal
  • St. Benedict is the patron saint of farmers, civil engineers, students and all members of religious communities
  • On the arms of the cross are the initial letters of a rhythmic Latin prayer: Crux sacra sit mihi lux! Nunquam draco sit mihi dux! (May the holy cross be my light!...
  • Above the cross is the word pax (peace), that has been a Benedictine motto for centuries. Around the margin of the back of the medal, the letters V R S N S M V...
  • Makes a great gift for yourself or a loved one

Self-Regulatory Organizations; ICE Clear Europe Limited; Order Granting ..  — Insurance News Net
ICE Clear Europe states that the changes to the Risk Policy amend the calculation of CDS initial margin requirements to comply with margin requirements under EMIR Article 41 and Article 24 of the implementing Regulatory Technical Standards. /5/ ICE ..

Lumen Mundi Pyx with St. Benedict Medal Gold & Silver Plated Religious Icon Hospital Church
Home (Lumen Mundi)
  • This is a new gold and silver plated Pyx with St. Benedict Medal
  • St. Benedict is the patron saint of farmers, civil engineers, students and all members of religious communities
  • On the arms of the cross are the initial letters of a rhythmic Latin prayer: Crux sacra sit mihi lux! Nunquam draco sit mihi dux! (May the holy cross be my light!...
  • Above the cross is the word pax (peace), that has been a Benedictine motto for centuries. Around the margin of the back of the medal, the letters V R S N S M V...
  • Perfect for holy communion
FindingKing St. Benedict Medal Gold Plated Enamel Red & Brown 1 1/4"
Art and Craft Supply (FindingKing)
  • This is a new gold plated red and brown enamel St. Benedict medals
  • St. Benedict is the patron saint of farmers, civil engineers, students and all members of religious communities
  • On the arms of the cross are the initial letters of a rhythmic Latin prayer: Crux sacra sit mihi lux! Nunquam draco sit mihi dux! (May the holy cross be my light!...
  • Above the cross is the word pax (peace), that has been a Benedictine motto for centuries. Around the margin of the back of the medal, the letters V R S N S M V...
  • Makes a great gift for yourself or a loved one
FindingKing 6 St. Benedict Revolving Key Rings Gold Plated 1 1/4"
Art and Craft Supply (FindingKing)
  • This is a new set of 6 gold plated St. Benedict revolving key rings
  • St. Benedict is the patron saint of farmers, civil engineers, students and all members of religious communities
  • On the arms of the cross are the initial letters of a rhythmic Latin prayer: Crux sacra sit mihi lux! Nunquam draco sit mihi dux! (May the holy cross be my light!...
  • Above the cross is the word pax (peace), that has been a Benedictine motto for centuries. Around the margin of the back of the medal, the letters V R S N S M V...
  • Perfect for any kind of keys
FindingKing Pyx with St. Benedict Medal Gold & Silver Plated
Art and Craft Supply (FindingKing)
  • This is a new gold and silver plated Pyx with St. Benedict Medal
  • St. Benedict is the patron saint of farmers, civil engineers, students and all members of religious communities
  • On the arms of the cross are the initial letters of a rhythmic Latin prayer: Crux sacra sit mihi lux! Nunquam draco sit mihi dux! (May the holy cross be my light!...
  • Above the cross is the word pax (peace), that has been a Benedictine motto for centuries. Around the margin of the back of the medal, the letters V R S N S M V...
  • Perfect for holy communion
Related Posts