Article-2086166-0F66A9F

Maintenance call VS margin call

What You'll See: "The equity in your account has fallen below the minimum maintenance requirement. An immediate deposit of funds and/or the deposit of marginable securities are needed to satisfy this call."

What it Means: Per NYSE Rule 431 and FINRA Rule 4210, Scottrade will be required to liquidate positions if equity requirements are not met. Any accounts dropping below the minimum equity level require immediate action, meaning Scottrade could be required to liquidate some or all of the assets you hold with us in less than 24 hours to meet the call. Any positions liquidated will be at the discretion of Scottrade. Generally, drops in equity percentage are the result of market depreciation of held assets or opening transactions made in the account.

How a Maintenance Call Can Occur:

Let's say you deposit $5, 000 into a new margin account. Your equity in the account would be $5, 000, but you would have buying power of $10, 000.

If you spent all $10, 000 on 100 shares of XYZ @ $100/share, you would still have $5, 000 equity invested in XYZ and Scottrade would be lending you $5, 000.

Let's say XYZ dropped to $80/share. Your account value would decline to $8, 000. You would still owe Scottrade $5, 000 – leaving you with $3, 000 equity.

With an Account Value of $8, 000 you would be required to maintain an equity level of $2, 400 (8, 000 x .3 *30% maintenance requirement).

Since your equity is above the minimum maintenance requirement $3, 000 > $2, 400 you are not in a maintenance call situation.

Now let's say that XYZ drops to $70/share. Your account value would decline to $7, 000. You would still owe Scottrade $5, 000 – leaving you with $2, 000 equity.

With an Account Value of $7, 000 you would be required to maintain an equity level of $2, 100. (7, 000 x .3 (30% maintenance requirement).

Since your equity is less than the minimum maintenance requirement $2, 000

Potential Consequences: If the call is for more than $100, you will receive a notification from Scottrade alerting you to the call and reminding you to meet the call immediately. You will have two business days to meet the call. If you do not meet the call in that time, Scottrade has the right to sell off stock from your account to the extent that the call will be covered.

What You Can Do: There are three ways you can meet a maintenance call:

1. Sell stock - To determine how much stock to sell in order to meet the call, you need to consider the value and the maintenance requirement of the stock you're selling. The amount of proceeds that go to meet the call is calculated as the value of stock sold multiplied by the maintenance requirement. For example, to meet a maintenance call of $600, you could sell 400 shares of stock valued at $5 per share ($2, 000 of stock x 30%maintenance requirement = $600).

2. Deposit stock - To meet a maintenance call with deposited stock, the stock you deposit must be fully paid for. To determine how much stock to deposit, take the amount of the call and divide it by the loan value of the stock (loan value = 100% - maintenance requirement % of that stock). For example, to meet the same $600 call noted above at the Scottrade's 30% house requirement, you can find out how much stock you need to deposit using the equation: ($600 / loan value = $600 / 70% = $858). Therefore, you would need to deposit $858 of marginable stock to cover the $600 call.

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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 ..

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