Rules for margin accounts are set by both the US Federal Reserve Bank and the securities industry. Beyond regulatory rules, individual brokerage firms can and do impose their own requirements, which are potentially more stringent.

Federal regulation specifies that the minimum equity required in a margin account is $2,000, both as an initial deposit and as a minimum account value. If the value of your margin account falls below $2,000, access to full buying power will be curtailed.

The rules further say that for most stocks the initial requirement to hold a position is 50%. This 50% requirement is what allows you to use $5,000 to buy $10,000 worth of stock: To buy $10,000 of stock you must put up 50%, or $5,000.

Once a position is established, an account is subject to minimum “maintenance” levels, depending on the nature of the security. Like most other brokerage firms, we set the minimum maintenance requirement higher than the 25% required by FINRA: At SogoTrade most accounts and positions have a 30% minimum maintenance requirement. If your equity in the account falls below that, you will be immediately required to either deposit additional funds or liquidate securities. This situation is known as a maintenance margin call. (See below for more on margin calls and other types of calls.)

While certain securities are subject to more stringent requirements imposed by our clearing firm, the general SogoTrade margin maintenance requirements are as shown in the table below.

Important: Margin maintenance requirements are based on the market value of a stock, and not on the purchase price. This means that a decline in the price of a marginable security could result in a higher margin maintenance requirement for the stock, and a margin call in your account.