Margin Call

Demand by a securities broker-dealer or a futures clearinghouse to a clearing member for additional funds or collateral to offset position losses in a Margin account. If a bank loan is secured by marginable securities the lender may call the loan if the customer fails to post additional collateral or pay down the loan. If the margin call is on securities, the customer is asked to post more cash or eligible securities by a certain time the following day, or the collateral is sold to satisfy the outstanding loan.

View more Business & Finance videos

A demand by a broker that an investor who has purchased securities using credit extended by the broker (on margin) pay additional cash into his or her brokerage account to reduce the amount of debt owed.

A broker makes a margin call when the stocks in the account of the client have fallen below a particular percentage of their market price at the time of purchase, thereby increasing the outstanding debt and the broker's liability should the client become unable to pay. This process is also known as remargining.

A broker might also make a margin call when a client desires to make additional purchases of stock and securities.

A broker's demand on an investor using margin to deposit additional money or securities so that the margin account is brought up to the minimum maintenance margin. Margin calls occur when a you account value depresses to a value calculated by the broker's particular formula.

This is sometimes called a "fed call" or "maintenance call".

Investopedia Says:
You would receive a margin call from a broker if one or more of the securities you had bought (with borrowed money) decreased in value past a certain point. You would be forced either to deposit more money in the account or to sell off some of your assets.

Related Links:
Borrowing to increase profits isn't for the faint of heart, but margin trading can mean big returns. Finding Your Margin Investment Sweet Spot
Don't get forced into action. Learn how to plan properly to avoid making rash decisions. Reinvesting Capital Gains In Leveraged Portfolios
When boom times turned to bust, these trades proved devastating for traders and the broader markets. The Credit Crisis And The Carry Trade
Jesse Livermore's investing philosophy wasn't foolproof, but he's still recognized as one of the greatest traders in history. Jesse Livermore: Lessons From A Legendary Trader