Learning Center - Maintenance Requirements on Stock (2024)

FAQs

What is the maintenance requirement for a stock? ›

Although FINRA requires a 25% minimum maintenance margin, many brokerage firms may require that as much as 30% to 40% of the securities' total value should be available.

The Bottom Line

A house maintenance requirement is the minimum equity an investor must hold in their margin account after making a purchase. Once a security is bought on margin, the requirement kicks in. FINRA demands that at least 25% of the total market value of the securities be in the account at all times.

According to Regulation T of the Federal Reserve Board, the Initial Margin requirement for stocks is 50%, and the Maintenance Margin Requirement is 25%, while higher requirements for both might apply for certain securities.

The initial deposit and maintenance requirements must equal 20% of the current index value minus the out-of-the-money amount, if any, plus the premium amount received.

All maintenance operations included in the plan should fulfill the following 3 requirements: applicability, efficiency and profitability. An operation is applicable if it can be implemented; it is efficient if it significantly reduces failure rate and it is profitable if it improves production.

Stock Requirement means the amount of Capital Stock the member is required to hold based upon the greater of its Membership Stock Requirement or its Activity-based Stock Requirement, as described in Section V.

To calculate maintenance margin, divide the amount borrowed per share by the maximum percentage of borrowing allowed.

The initial margin is the amount a trader must deposit with their broker to initiate a trading position. The maintenance margin is the amount of money a trader must have on deposit in their account to continue holding their position, which is typically 50% to 75% of the initial margin.

Margin (also known as gross margin) is sales minus the cost of goods sold. For example, if a product sells for $100 and costs $70 to manufacture, its margin is $30. Or, stated as a percentage, the margin percentage is 30% (calculated as the margin divided by sales).

Maintenance Margin Definition

Minimum margin requirements for leveraged accounts are regulated by the government. Currently the Financial Industry Regulatory Authority (FINRA) sets the maintenance margin at 25% of the total value of securities that a trader holds in their margin account.

What is the maintenance requirement for Robinhood? ›

If you buy on margin, FINRA also requires you to keep at least 25% equity in your account with the brokerage, known as the maintenance margin. You can calculate your equity by taking the value of securities you own and subtracting the amount you owe to the broker.

Margin requirements

Vanguard's house requirement for most marginable securities is 35%, provided that you maintain a minimum of $2,000 of equity in your account.

(A TD Ameritrade account that's approved for margin trading must have at least $2,000 in cash equity or eligible securities and a minimum of 30% of its total value as equity at all times.)

When the maintenance required light comes up, it usually means that you need to change your vehicle's oil and the oil filter, rotate the tires, or inspect the level of various fluids. Manufacturers program this warning light to come up automatically every 5,000 miles (8,000 km) or after the last oil change.

Is TD Ameritrade free? TD Ameritrade offers commission-free trading of stocks, options and ETFs, and charges no annual or inactivity fees, which means you can hold an account at the broker for free.

Margin maintenance is the minimum portfolio value (excluding any crypto positions) that you need to prevent a margin call. Keep in mind. You always need to keep your portfolio above (i) $2,000 and (ii) your margin maintenance requirement to avoid these types of margin calls.

The fees vary and may be based on a per-contract or per-share charge. Account maintenance fees vary between $0 to $50 per account per year.