Margin maintenance is the minimum Long Market Value (LMV)* required to avoid a margin call. LMV represents the current market value of the assets purchased in your stock account. So, if you maintain an account equity above US$2,000.00, and are approved for margin trading, you will be able to use margin, and if your LMV exceeds the margin maintenance requirements, you typically will not get a margin call.
Once your margin maintenance reaches the minimum amount, we will send you an email to fund your account, in order to avoid Passfolio Securities liquidating positions at current market value to restore the required margin maintenance.
There are two types of margin maintenance:
1. House Maintenance Call (35% of LMV*)- generally 4 days to pay
2. Stock Exchange Call (25% of LMV) - satisfy immediately ASAP
For example, the long market value of the securities in a margin account declines to $50,000 when the debit balance is $40,000. The equity is $10,000. Since the required equity is $17,500 ($50,000 x 35%), the customer would receive a house maintenance call for $7,500.
*Long market value (LMV) is the current market value of the securities purchased in a margin account. The LMV can, and will likely vary; it can change when your assets increase or decrease in value.
When a customer purchases securities on margin, the margin call (the amount the customer has to come up with) is based on the LMV of the securities.
If your margin equity falls below a certain amount based on the amount you have borrowed, then the account is issued a margin call. You may be required to sell securities or deposit funds to meet the margin call, and in some cases securities may be sold without notification to you.
Please note that the Interest Margin Rate can change without notice given market conditions.