FAQ

Why have I been charged a margin penalty?

Insufficient Margin: If you're trading on margin (borrowed funds from your broker to buy securities), you must maintain a minimum level of equity in your account known as the maintenance margin. If the value of your securities falls below this maintenance margin due to market movements, you might be required to deposit additional funds (called a margin call) to bring your account back to the required level. Failure to do so can result in a margin penalty.
Margin Call Non-Compliance: If you receive a margin call and do not deposit additional funds to meet it within the specified time frame, your broker may impose a margin penalty or liquidate some of your securities to cover the shortfall.
Regulatory Requirements: Brokers are required to enforce certain margin rules set by regulatory authorities (like SEC in the US or similar bodies in other countries). If you violate these rules, such as exceeding allowed margin limits or failing to meet margin calls, penalties can be imposed.
Broker Policies: Each broker may have specific policies regarding margin requirements and penalties for non-compliance. These can vary widely, so it's important to understand your broker's terms and conditions.

Last updated: A Month Ago