A margin call is a broker's demand that a customer add cash or securities to a margin account to eliminate or reduce a shortfall in required margin. It happens because the shares bought with borrowed money are the loan's collateral, and a falling price shrinks the customer's equity while the loan stays the same.
Key takeaways
- Regulation T sets the initial margin when you buy, and FINRA sets a minimum maintenance level (25% of market value for long positions) that your broker may raise. Since June 4, 2026, FINRA also requires firms to track intraday margin deficits, though firms may phase this in until October 20, 2027.
- In the hypothetical example below, a $20,000 purchase with a $10,000 loan reaches a 25% maintenance call after a 33.3% price fall, a 30% call after 28.6%, and a 40% call after 16.7%.
- A sale must be far larger than a deposit to cure the same call: after a 40% drop, either a $1,600 deposit or a $5,333 sale restores 30% equity, and both leave the account exactly at the line.
- According to the SEC's investor bulletin, a firm can sell your securities without consulting you, you cannot choose which ones, and you have no right to an extension.
How a margin loan creates a call
In a margin account the broker lends you cash, with the securities in the account as collateral. The SEC's investor bulletin Understanding Margin Accounts (dated June 10, 2021) defines equity as the value of the securities less what you owe the firm. The loan is a fixed dollar amount (plus any interest added to it), so every dollar of price decline comes out of equity.
Leverage works in both directions. The bulletin's own example is a $50 stock bought with $25 of cash and a $25 loan: it falls to $15, and the investor loses the whole $25 and owes the broker another $10 plus interest. The investor lost more than 100% of the money put in.
Margin loans also charge interest, and the bulletin notes that rates can vary substantially between firms. That cost lowers returns and increases the amount the investment must earn to break even.
Reg T calls and maintenance calls
Two long-standing layers of rules produce two kinds of call, and a 2026 FINRA change added a third, intraday check (see below). The first two differ in what sets them off and in the clock that applies. The figures here are for long stock positions; short sales carry different requirements, such as the greater of $5.00 per share or 30% of market value for a stock trading at $5 or more under Rule 4210(c)(3).
| Feature | Regulation T (initial) call | Maintenance call |
|---|---|---|
| Rule | Federal Reserve Regulation T, 12 CFR 220.12 and 220.4 | FINRA Rule 4210, plus the firm's own terms |
| Level | 50% of the current market value of a margin equity security; FINRA also requires a minimum deposit of $2,000 or the full purchase price, whichever is less, per the SEC bulletin | At least 25% of the current market value of long margin securities (100% for equity that is not margin-eligible); many firms set more |
| What creates the call | Under 220.4(c)(1), the day's transactions create or increase a margin deficiency; a price fall on its own does not create a Reg T call | Account equity falls below the maintenance requirement, whether from a price fall or a higher house requirement, per the SEC bulletin |
| Time to meet it | One payment period (see below) | "As promptly as possible" and within 15 business days of the deficiency under Rule 4210(f)(6), unless FINRA grants more time; in practice the firm may sell sooner (see below) |
| If unmet | The creditor must liquidate enough securities to meet the call or remove the deficiency, whichever is less (220.4(d)) | The firm sells securities to bring equity back to its requirement, per the bulletin |
Time limits under Regulation T
Regulation T says a margin call must be satisfied within one payment period after the deficiency was created or increased. Section 220.2 defines the payment period as the number of business days in the standard US settlement cycle, as defined in SEC Rule 15c6-1(a), plus two business days. Rule 15c6-1(a) currently sets that cycle at the first business day after the trade date, so the payment period works out to three business days (1 + 2), based on the eCFR text as of October 2026. A creditor may apply to its examining authority for a limited extension, but the customer cannot demand one. Under 220.4(d), if the deficiency created or increased is $1,000 or less, the creditor need not act.
House requirements
The bulletin says firms may set their own "house" requirements that are more restrictive than the regulatory ones. It reports that many firms use maintenance levels of 30% to 40%, "sometimes higher depending on the type of securities purchased". It also says firms can raise requirements at any time without advance notice.
FINRA Rule 4210(d)(1) requires firms to have procedures to formulate their own margin requirements and to review the need for higher requirements for individual securities or customer accounts. Rule 4210(f)(1) says substantial additional margin must be required where securities are subject to "unusually rapid or violent changes in value", lack an active market, or are held in amounts that cannot be liquidated promptly. Under 4210(f)(8)(A), FINRA itself may prescribe higher maintenance requirements for any securities when market conditions warrant. Which positions carry a higher house rate is set out in each firm's own terms.
Intraday margin since June 2026
FINRA amended Rule 4210 with effect from June 4, 2026, as described in Regulatory Notice 26-10. The amendment replaced the day-trading margin rules, including the pattern day trader designation and its $25,000 minimum equity, with an intraday margin standard. Under the new standard, firms check accounts during the day, not only at the close: on any day when a trade or withdrawal reduces the account's excess over its maintenance requirement, the firm determines whether an "intraday margin deficit" arose and must require it to be satisfied as promptly as possible. The notice says the regular maintenance requirements are unchanged and the new rule supplements them.
A deficit stays outstanding until it is satisfied or, at the latest, until the close of business on the 15th business day after it arose. A customer who makes a practice of not meeting these deficits, and misses the fifth business day, faces a block of up to 90 calendar days, lifted earlier if the deficit is met, on creating or increasing a debit balance or a short position. Firms that need more time may phase the change in until October 20, 2027, so only the firm can say which regime currently applies to an account.
Where the price triggers a call
Illustrative example (hypothetical numbers, interest ignored). An investor buys $20,000 of stock with $10,000 of cash and a $10,000 margin loan, the 50% Regulation T split. A maintenance call starts when equity falls below the maintenance percentage m of the securities' value. With shares worth V and a loan L, equity is V - L, so:
trigger value V = L / (1 - m)
price fall to trigger = 1 - V / purchase value
L = loan ($10,000) m = maintenance requirement V = market value of the shares
| Maintenance requirement | Value that triggers a call | Fall from $20,000 |
|---|---|---|
| 25% | $13,333 | 33.3% |
| 30% | $14,286 | 28.6% |
| 40% | $16,667 | 16.7% |
The same position, with the same loan, reaches a call after a drop of 33.3% at one firm and 16.7% at another. Two numbers set the trigger: how much of the position is borrowed and the maintenance percentage. Borrowing $5,000 instead of $10,000 on the same $20,000 position moves the 30% trigger from a 28.6% fall to a 64.3% fall ($5,000 / 0.70 = $7,143). The 50% Regulation T figure is only the most you can borrow at purchase, not the amount you have to borrow.
Cash deposit or forced sale
Illustrative example, continued. The stock falls 40%, so the $20,000 position is worth $12,000. The loan is still $10,000, so equity is $2,000, which is 16.7% of the market value. At a 30% requirement the firm needs $3,600 of equity ($12,000 x 0.30), so the account is $1,600 short.
| Way to cure the call | Amount | Account afterward |
|---|---|---|
| Deposit cash | $1,600 | Shares $12,000, loan reduced to $8,400; equity $3,600 = 30% |
| Sell shares, repay loan | $5,333 | Shares $6,667, loan $4,667; equity $2,000 = 30% |
The sale needs more than the deposit because selling reduces the loan and the collateral by the same amount, leaving equity unchanged at $2,000. Only the shrinking base lowers the requirement: equity of $2,000 equals 30% only when the shares are worth $6,667, so $5,333 must go. Check: $12,000 - $2,000 / 0.30 = $5,333. At 25% the figures are a $1,000 deposit or a $4,000 sale; at 40%, a $2,800 deposit or a $7,000 sale.
Either cure leaves the account exactly at the 30% line: after the deposit, the trigger value is $8,400 / 0.70 = $12,000, and after the sale it is $4,667 / 0.70 = $6,667, both equal to the current value of the shares. Any further fall brings a new call.
The $8,000 loss is the same on paper whichever cure is chosen. The investor put in $10,000, so it is 80% of the cash invested; an unlevered holder of $10,000 of the same stock loses 40%. A sale turns that loss into a realized one on the shares sold. A deposit keeps the full position, with its chance of recovery and its exposure to further falls, and puts another $1,600 at risk. Price is not the only trigger: because a firm can raise its requirement at any time, a call can also arrive with no price move at all.
What a broker may do without asking
The bulletin lists the risks plainly. A firm may sell some or all of your securities without consulting you, you are not entitled to choose which securities it sells, and you are not entitled to an extension of time on a margin call. It adds that even if a firm offers time, under most margin agreements it can sell without waiting for you to meet the call. The firm may also not be required to tell you that the account has fallen below its maintenance requirement. While a call is open, the bulletin says you generally cannot purchase more securities in the account.
Regulation T also limits withdrawals: under 220.4(e), cash or securities cannot be withdrawn if a deposit is required for a transaction on the same or a previous day, or if the withdrawal would create or increase a deficiency.
A documented case of concentrated positions
In an April 27, 2022 press release, the SEC said price declines in Archegos's most concentrated positions allegedly triggered significant margin calls that Archegos was unable to meet. Those positions were held through total return swaps bought on margin, a very different setting from a retail margin account, and the SEC's claims were allegations in a complaint. The mechanism is the same at any scale: when collateral is concentrated in a few holdings, a fall in those holdings drives the call.
Frequently asked questions
Can a margin call leave me owing more than I invested?
Yes. The SEC bulletin states that you can lose more money than you have invested. In its $50-to-$15 example, the investor loses the full $25 of cash and owes the broker a further $10 plus interest on the loan.
Can I take money out of the account while a call is open?
Not if a deposit is required for a transaction on the same or a previous day, or if the withdrawal would create or increase a deficiency (12 CFR 220.4(e)). The bulletin adds that you generally cannot buy additional securities until the call is met.
What can I deposit to meet a Regulation T call?
Under 220.4(c)(2), the margin may be satisfied by a transfer from the special memorandum account or by a deposit of cash, margin securities, exempted securities, or a combination. A transaction, position or deposit used to satisfy one requirement cannot also satisfy another (220.4(c)(4)).
Does a cash account get margin calls?
A cash account, per the bulletin, requires you to pay in full and does not allow borrowing from the broker. With no loan there is no maintenance equity to defend. The bulletin warns that some applications make a margin account the default type, so the account type is worth confirming before signing.
Does borrowing against the account for non-investment purposes change the risk?
No. The bulletin says that using margin loans for purposes such as buying real estate or paying off personal credit does not change how the loans work. They remain secured by the securities in the account and carry the same margin-call risks.
Checklist before using margin
- Find the firm's maintenance percentage and its stated right to change it in the margin agreement, then compute your trigger value with the formula above.
- Ask whether the firm already applies the intraday margin standard or is still in the transition period that runs to October 20, 2027.
- Read what notice, if any, the firm must give before selling your securities.
- Check the interest rate and how it is calculated, since it varies between firms.
- Decide in advance how a shortfall would be cured, by deposit or by sale, using the figures from your own position.
- Confirm that the account type you are opening is the one you intend.
Sources
- SEC Office of Investor Education and Advocacy, Investor Bulletin: Understanding Margin Accounts (June 10, 2021)
- 12 CFR 220.4, Margin account (Regulation T)
- 12 CFR 220.2, Definitions (Regulation T)
- 12 CFR 220.12, Supplement: margin requirements
- 17 CFR 240.15c6-1, Settlement cycle
- FINRA Rule 4210, Margin Requirements
- FINRA Regulatory Notice 26-10, intraday margin standards (April 20, 2026)
- SEC press release 2022-70 (April 27, 2022)
