Margin Call

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Margin Call

A demand by a Broker that an investor who has purchased Securities using credit extended by the broker (on margin) pay additional cash into his or her brokerage account to reduce the amount of debt owed.

A broker makes a margin call when the stocks in the account of the client have fallen below a particular percentage of their market price at the time of purchase, thereby increasing the outstanding debt and the broker's liability should the client become unable to pay. This process is also known as remargining.

A broker might also make a margin call when a client desires to make additional purchases of stock and securities.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Sebastian Holding faced $511m in margin calls but the group claimed that Deutsche Bank put through these trades, unauthorised, and should not have been booked.
Instead, the European debt situation steadily worsened and bond prices continued to decrease, leading to margin calls from the lenders in the RTM trades.
one of the major problems of selling options is the position can deteriorate very rapidly and margin calls can come thick and fast.
Analysts noted that if Taiwanese stocks drop further, the pressure for margin calls will step up, especially for the four industries of solar energy, LED (light-emitting diode), DRAM (dynamic random access memory), and FPD (flat panel display).
To speed up the workflow, the team developed the Receipts and Payments Interactive Database (Rapid), a Microsoft .NET application that automates portions of the workflow, generates margin calls and valuation statements, and sends forecasts to TFS's funding desk.
Over 12 mid- cap stocks sink due to margin call pressure
As part of DM Edge, the company's derivatives margin management service, the improvements will provide clients with a fully automated system that facilitates the entire margin call and collateralisation process, improves reporting capabilities and reduces operational risk.
Brokers had previously been required to make margin calls at 60 percent.
One of the strategy's negatives is its high cost, although the triple leverage, absence of margin calls and time premium, and the long-term nature of the strategy make up for this.
But for co-op elevators--the "middlemen" and conduit of America's huge grain market--the historic price rise meant they were exposed to a vast increase in risk levels as they scrambled to meet repeated margin calls for grain forward-contracted on the Chicago Board of Trade.
Sumner Redstone and Lionsgate's Michael Burns, meanwhile, were hit by margin calls, losing a portion of their personal stakes in recent weeks.
MUMBAI: Indian shares fell as much as 12.9 per cent yesterday before ending down 4.97pc, a seventh successive loss, as panicked investors sold amid margin calls on declining share portfolios and fears of a global downturn.