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 financiaಌl institution that lends th📖e money for these trades.

Understanding Marginable

The rules governing which securities are marginable and which are not are set out in 澳洲幸运5官方开奖结果体彩网:Regulation T and 澳洲幸运5官方开奖结果体彩网:Regulation U of the Federal Reserve. Self-regulatory organizations such as the NYSE and FINRA are also involved in the regulatory process. Although individual brokers can adopt their own requirements, t💞hey mustꦓ be at least as strict as those prescribed by law.

The distinction between marginable and 澳洲幸运5官方开奖结果体彩网: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官方开奖结果体彩网:collateral they r♎eceive from investors meets ℱminimum 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官方开奖结果体彩网:initial public offerings (IPOs), are typically not marginable due to the higher risks associated with them. Most brokers publish a full list of the marginable securities they offer on 🌼their websi🎉tes.

Purchasing Marginable Securities

Investors must buy marginable securities through a margin account. These accounts require a 澳洲幸运5官方开奖结果体彩网: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 soꦚ choose. 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官方开奖结果体彩网:maintenance margin fluctuates on a daily basis as the value of the securities in the account increas🍬es🔯 and decreases in value.

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官方开奖结果体彩网:margin call—a broker's demand for additional funds or securitie🌳s to return the account to the minimum mainte𒁃nance margin.

Purchasing marginable stocks, ETFs, and 🍬other securities is more suitable for short-term hold times because of the interest investors have to pay on their margin loans. A❀s the interest a🤡ccrues over time, the more the marginable securities have to return to break even.