The maintenance requirement for margin accounts is the minimum equity you must keep in the account after buying securities with borrowed money. Under FINRA Rule 4210, that floor is 25% of the current market value of the securities you hold long.1Securities and Exchange Commission. Notice of Filing of Proposed Rule Change Relating to FINRA Rule 4210 Margin Requirements Equity means the market value of your holdings minus what you owe the broker. Drop below the floor and your broker can sell your positions to cover the loan, often without warning you first.
How the 25% Floor Works
Say you own $40,000 of stock and borrowed $20,000 to buy it. Your equity is $20,000, or 50% of market value. You’re well above the line. If that stock falls to $28,000, your equity shrinks to $8,000, roughly 28.6%. Still above 25%, but the cushion is thin. A little more slippage and you’re in margin call territory.
The 25% figure is the regulatory minimum for standard stock positions. Different holdings carry different maintenance percentages:
- Investment-grade corporate bonds: 10% of current market value.2FINRA. 4210. Margin Requirements
- Municipal bonds and other exempt securities: 7% of current market value.2FINRA. 4210. Margin Requirements
- Security futures contracts: 20% of current market value.2FINRA. 4210. Margin Requirements
Some securities can’t be margined at all. Stocks that don’t meet exchange listing standards, certain low-priced equities, and newly issued shares during their initial trading period require 100% of the purchase price upfront.3eCFR. Part 220 Credit by Brokers and Dealers (Regulation T) You can hold them in a margin account, but they generate no borrowing power.4FINRA. Margin Regulation
Calculating the Price Where You Fall Below
Finding the exact price that triggers a margin call takes one step. Divide your loan balance (the debit balance) by 0.75. The result is the market value at which your equity would equal 25% of that value.
A worked example: you buy $20,000 of stock, putting up $10,000 of your own money and borrowing $10,000. Your debit balance stays at $10,000 regardless of what the stock does, setting interest aside. Divide $10,000 by 0.75 and you get about $13,333. If the market value falls to $13,333, your equity is $3,333, which is exactly 25%. Any price below that puts you in violation.1Securities and Exchange Commission. Notice of Filing of Proposed Rule Change Relating to FINRA Rule 4210 Margin Requirements
If your broker imposes a 30% house requirement instead of 25%, divide by 0.70 instead. In the same example, the trigger price rises to about $14,286. The higher the requirement, the sooner the call arrives.
House Requirements Are Usually Higher
Every major brokerage sets its own maintenance levels above the FINRA floor, and those house requirements are the numbers that actually govern your account. Common house requirements sit at 30% or 40%, and they can climb higher for volatile stocks, thinly traded securities, or concentrated positions.2FINRA. 4210. Margin Requirements A firm might demand 50% or more on a biotech stock that swings 10% a day, and it can require 100% for securities it considers too risky to lend against at all.
FINRA Rule 4210 requires firms to review whether higher margins are needed for securities subject to rapid price changes, illiquid markets, or positions large enough that they can’t be liquidated quickly.2FINRA. 4210. Margin Requirements Firms can also raise house requirements at any time. You might open a position under a 30% requirement and wake up to a 50% requirement because the firm reassessed the risk overnight. Your margin agreement grants this discretion.
Short Positions Have Their Own Requirements
Short sales use different maintenance math because the risk profile is different. Under Rule 4210:
- Stocks priced at $5.00 or above: the greater of $5.00 per share or 30% of current market value.2FINRA. 4210. Margin Requirements
- Stocks priced below $5.00: the greater of $2.50 per share or 100% of current market value.5FINRA. Regulatory Notice 11-15 Guidance on Low-Priced Equity Securities in Customer Margin and Firm Proprietary Accounts
The per-share minimums on cheap stocks are punishing on purpose. A stock trading at $1.00 per share carries a $2.50 per share maintenance requirement, which is 250% of market value. That effectively makes shorting penny stocks unworkable on margin.
What Happens When You Fall Below
Here’s the part most investors misread. Your broker is not required to contact you before selling securities to cover a margin deficiency. FINRA’s guidance is direct: firms don’t have to issue a margin call before liquidating, and they can sell enough to pay off your entire margin loan, not just enough to cure the shortfall.6FINRA.org. Know What Triggers a Margin Call
Many brokerages do send a margin call as a courtesy and give you a window to respond. Nothing in the rules requires it. The margin agreement you signed almost certainly grants the firm full discretion over which securities to sell, when to sell, and how much. On sharply falling days, some firms issue intraday calls and may automatically liquidate positions before the trading day ends.6FINRA.org. Know What Triggers a Margin Call
How to Cure a Margin Call
If your broker gives you time, you have three ways to bring the account back into compliance:
- Deposit cash to cover the deficiency.
- Sell securities to reduce the loan balance.
- Transfer fully paid-for shares in from another account to raise equity.
Depositing cash is the cleanest option because it doesn’t force sales at depressed prices. But timing matters. If the market keeps falling while you’re arranging the deposit, the deficiency can grow before your cash settles.
You Can Owe More Than You Invested
If your holdings drop below the loan balance, you have negative equity. Buy stock on margin and watch it go to zero, and you still owe the full loan amount. A cash account limits your loss to what you deposited; a margin account does not. The broker liquidates what it can and then pursues you for the balance. This is the worst-case outcome, and it is not theoretical.
Pattern Day Traders: The $25,000 Rule
If your broker flags you as a pattern day trader, a stricter maintenance rule kicks in. You must keep at least $25,000 in equity in the account at all times. That equity has to be in place before you resume day trading, and it cannot dip below $25,000 while the account is active.7Federal Register. Notice of Filing of a Proposed Rule Change To Amend FINRA Rule 4210 Margin Requirements To Replace the Day Trading Margin Provisions With Intraday Margin Standards
Fail to meet a day-trading margin call within five business days and the account is restricted to cash-only transactions for 90 days or until the call is satisfied.2FINRA. 4210. Margin Requirements That restriction is separate from what happens with a standard maintenance call, which can trigger immediate liquidation.
Interest Erodes Your Equity Over Time
Maintenance requirements measure equity ratios, but the loan itself carries a cost that keeps eating at those ratios. Brokerages calculate margin interest daily on the outstanding balance and post the charges to your account monthly. Those charges increase your effective debit balance, which means your equity shrinks even on days when the stock price doesn’t move. In a long sideways market, interest alone can push you toward a margin call without any price decline at all.