What Is Marginable?

Marginable securities refer to stocks, bonds, futures, or other securities capable of being traded on margin. Securities traded on margin, paid for by a loan, are facilitated through a brokerage or other financial institution that lends the money for 🌸these trade🅰s.

Understanding Marginable

The rules governing which securities are marginable and which are not are set out in 澳洲幸运5开奖号码历史查询:Regulation T and 澳洲幸运5开奖号码历史查询:Regulation U of the Federal Reserve. Self-regulatory organizations such as the NYSE and FINRA are also involved in the r⛎egulatory process. Although individual brokers can adopt their own requirements, they must be at leas🌱t as strict as those prescribed by law.

The distinction between marginable and 澳洲幸运5开奖号码历史查询:non-marginable securities exists for two main reasons. First, it protects investors by reducing the risks associated with the use of leverage. Second, it protects brokers and other financial institutions by ensuring that the 澳洲幸运5开奖号码历史查询:collateral they receive 🌄🐼from investors meets minimum standards of quality.

Securities with high liquidity are more likely to be marginable. Other securities, such as some stocks priced below $5 per share or stocks for 澳洲幸运5开奖号码历史查询:initial public offerings (IPOs), are typཧically not marginable due to the higher risks associated with them. Most🌞 brokers publish a full list of the marginable securities they offer on their websites.

Purchasing Marginable Securities

Investors must buy marginable securities through a margin account. These accounts require a 澳洲幸运5开奖号码历史查询:minimum investment of $2,000; however, some brokers require more. Investors can then borrow up to 50% of the purchase amount of the marginable security. For example, if an investor opens a $50,000 margin account, they can purchase up to $100,000 of a marginable security. Investors can borrow less than 50% of the purchase price of the marginable security if they so chꦍoose. For instance, an investor may only want to borrow up to 25% of the purchase price.

Margin accounts also require an amount of available cash or equivalent value known as a maintenance margin. This is a minimum balance that must be maintained to control the securities held in the account. The 澳洲幸运5开奖号码历史查询:maintenance margin fluctuates on a daily basis as the valueꦛ of the securities in the account increases and decreases in valu✃e.

For example, if the stocks in a margin account fall, the maintenance margin increases. If the margin account falls below the maintenance margin, the customer receives a 澳洲幸运5开奖号码历史查询:margin call—a broker's demand𝓀 for additional funds or securities to return the acc✱ount to the minimum maintenance margin.

Purchasing marginable sto༺cks, ETFs,﷽ and other securities is more suitable for short-term hold times because of the interest investors have to pay on their margin loansꦓ. As the interest accrues over time, the more the marginable securities have to return to break even.