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Portfolio margin is a risk-based margin policy available to qualifying US investors. The goal of portfolio margin is to align margin requirements with the overall risk of the portfolio. Portfolio margin usually results in significantly lower margin requirements on hedged positions than under traditional rules.
Special memorandum account (SMA) [1] is a margin credit account used for calculating US Regulation T requirements on brokerage accounts. In addition to Initial Margin and Maintenance Margin requirements, the SMA ledger is used to lock in unrealized gains that augment the client's buying power. According to Regulation T, Section 220.5: [2]
In contrast, if the market price of his contract has decreased, the exchange charges his account that holds the deposited margin. If the balance of this account becomes less than the deposit required to maintain the account, the trader must immediately pay additional margin into the account in order to maintain the account (a "margin call").
In order to decrease the risk of a counter party to default, a technique called portfolio margining is applied, which simply means that the assets within a portfolio are clustered and sorted by the descending projected net loss, e.g. calculated by a pricing model. [2] One can then determine for which cluster(s) one wants to perform margin calls.
If an account loses too much money due to underperforming investments, the broker will issue a margin call, demanding that you deposit more funds or sell off some or all of the holdings in your ...
For example, E-Trade offers just 0.01 percent APY on brokerage accounts with less than $500,000 in cash. J.P. Morgan brokerage accounts earn the same 0.01 percent through its deposit sweep program ...
In connection with an investigation into the SEC's role in the collapse of Bear Stearns, in late September, 2008, the SEC's Division of Trading and Markets responded to an early formulation of this position by maintaining (1) it confuses leverage at the Bear Stearns holding company, which was never regulated by the net capital rule, with leverage at the broker-dealer subsidiaries covered by ...
The post How to Open a Margin Account With Schwab appeared first on SmartReads by SmartAsset. Margin trading is the practice of investing with borrowed money. It is a high-risk strategy and should ...