A Fed call is a demand from your brokerage to deposit cash or securities because a margin purchase you made didn’t meet the Federal Reserve’s 50% initial margin requirement under Regulation T.1eCFR. 12 CFR 220.12 – Supplement: Margin Requirements You have three business days from the trade date to cover the shortfall. Miss that window and your broker will sell enough of your holdings to close the gap, choosing the positions themselves.
Why the 50% Rule Creates the Call
Regulation T is the Federal Reserve rule that governs how much a broker-dealer can lend you to buy securities. When you buy a marginable stock, at least half the purchase price has to come from your own money or eligible securities you already own. The other half can be borrowed from the broker.1eCFR. 12 CFR 220.12 – Supplement: Margin Requirements
The math is simple. Buy $20,000 of stock on margin and you need $10,000 of equity in the account when the trade goes through. Equity here means the market value of what you hold minus what you owe the broker. If that number falls short on a new purchase, Regulation T has been violated and a Fed call appears on your account.
Fed Call vs. Maintenance Call vs. House Call
These three get confused constantly, and mixing them up leads to bad decisions about how much time you have and how much money you owe.
A Fed call is tied to the moment you open a position. It fires when the initial 50% requirement wasn’t satisfied at purchase.1eCFR. 12 CFR 220.12 – Supplement: Margin Requirements
A maintenance call comes later, after you already own the stock and its price has dropped. FINRA Rule 4210 sets the floor for long positions at 25% of current market value; fall below that and you get a maintenance call.2FINRA. FINRA Rule 4210 – Margin Requirements
A house call is your broker’s stricter version of the same idea. Most major firms set their internal maintenance floor at 30% or higher. When equity slips below that firm threshold but stays above the 25% regulatory line, you get a house call rather than a FINRA-triggered one. Deadlines and rules for house calls are set by the firm, not by federal regulation.
How You End Up With One
The obvious trigger is placing a buy order bigger than your buying power supports. With $5,000 of available margin equity, a $15,000 stock purchase requires $7,500 to meet the 50% threshold. You’re $2,500 short and a Fed call posts immediately.
A subtler trigger is a sharp price drop right after you buy. If the stock falls hard the same day, your equity can dip below the initial requirement before the trade even settles. Your broker treats that as a Regulation T deficiency because the initial requirement was never truly met.
Transferring marginable securities out of the account can create the same problem. If those securities were propping up the equity calculation on recent buys, pulling them out can leave you below the initial requirement on positions still inside the payment window.
Three Ways to Satisfy the Call
You have three options, and the third one has math that surprises people.
- Deposit cash. Every dollar deposited applies directly against the call amount. A $3,000 Fed call takes a $3,000 deposit.
- Transfer in marginable securities. You can move fully paid securities from another account, but only a portion of their value counts toward the call. Because the requirement is 50%, a security worth $6,000 contributes about $3,000.
- Sell existing positions. This works, but you need to sell roughly twice the call amount, not the amount itself.
The reason for the 2:1 ratio is that selling reduces your market value and your debit balance at the same time. The formula is the call amount divided by the margin requirement percentage.3FINRA. Know What Triggers a Margin Call A $2,000 Fed call at 50% initial margin means selling $4,000 of stock ($2,000 ÷ 0.50). Selling less leaves a residual call that still has to be resolved.
The Three-Business-Day Deadline
Regulation T gives you one “payment period” to fix the shortfall, defined as the standard settlement cycle plus two business days.4FINRA. 2025 Extensions of Time Filing Schedule Since U.S. markets moved to T+1 settlement on May 28, 2024, that period is three business days from the trade date.5SEC. SEC Chair Gensler Statement on Upcoming Implementation of T+1
The clock starts on the trade date itself, and only business days count. Weekends and market holidays don’t shorten your window. A Monday trade with a Fed call gives you until Thursday’s close of business. Electronic bank transfers typically take one to two business days to clear, so waiting until the last day to start a transfer is risky. Move the same day you get the notice when you can.
Asking FINRA for More Time
If you can’t meet the deadline, your broker can file an extension request with FINRA on your behalf. Two conditions apply: the request has to be filed before the payment period expires, and the shortfall has to exceed $1,000.6FINRA. How to File an Extension of Time With FINRA
You’re limited to five extension requests in any rolling 12-month period.7FINRA. Reg T And SEC Rule 15c3-3 Reason Codes Valid reasons include ordinary situations like delayed fund transfers and exceptional ones like natural disasters, system errors, or corporate actions affecting the security. Exceptional-circumstance requests require documentation from the broker explaining why the standard window couldn’t be met. Since the broker files the application, not you, talk to them the moment you know payment will be late.
What Happens If You Miss the Deadline
If the payment period ends with no resolution and no extension, your broker is required to liquidate enough of your positions to eliminate the deficiency.8eCFR. 12 CFR 220.4 – Margin Account The broker picks which positions to sell. They don’t have to consult you, and they don’t have to sell the ones you’d least want to lose. There is one narrow carve-out: if the deficiency is $1,000 or less, the broker isn’t required to force a sale.
Taxes work the same as with a voluntary sale. You realize a capital gain or loss based on the difference between your cost basis and the sale proceeds. Using the proceeds to pay down a margin loan doesn’t change the calculation. If the broker sells a position you’ve held less than a year at a gain, you owe short-term capital gains tax at ordinary income rates.
The account-level consequences can run longer than the sale itself. Repeated failures may lead your broker to restrict margin trading, impose fees for handling forced sales, or downgrade the account to cash-only. These penalties are set by the firm and can go beyond the regulatory minimum.
Don’t Confuse a Fed Call With Freeriding
A Fed call is not the same thing as freeriding. Freeriding happens when you buy a security and sell it before ever paying for it, and it triggers a 90-calendar-day freeze on the cash account rather than the three-day cure period described above.9Investor.gov. Freeriding During that freeze, you have to have the full purchase amount settled in the account before placing any buy order.10eCFR. 12 CFR Part 220 – Credit by Brokers and Dealers (Regulation T) Both violations live under Regulation T, but the timelines and remedies are separate.