However, if the stock had fallen to $2.50, all of the client`s money would have disappeared. As 1,000 shares * $2.50 is $2500, the broker would inform the client that the position will be closed unless the client puts more capital into the account. The client has lost his money and can no longer hold the position. This is a call from Margin. 9. Non-individual certification. If this Margin Agreement applies to a trust account, other fiduciary account or another non-individual account, you hereby confirm and represent to DriveWealth that the use of a Margin account and, in particular, the lending, lending and seizure of securities and other assets, as described above, in accordance with the provisions of the trust or other instruments and applicable law, is in compliance with the provisions of the trust or other instruments and the applicable law governing the trust or any other entity. If the value of eligible collateral in your account is covered by the margin maintenance requirement, we may call a “Margin Call”. A Margin Call is an invitation issued by DriveWealth to deposit other securities and assets into your account. A margin call can take place for a variety of reasons; The most common reason is that the value of the long securities held in your account as collateral decreases (i.e. the market value decreases).
7. Restricted Securities as Collateral. You agree that all securities and other assets that you deposit into your account as security for any loan you receive from DriveWealth will be properly provided. If you file limited securities in violation of this Agreement and do not immediately replace them with securities and other assets satisfactory to DriveWealth or if you pay in full the Margin Loan secured by such limited securities, you agree that you are in arrears under this Agreement and DriveWealth may, without prejudice to its others a number of financial rights and remedies take all of the following measures: A brokerage company has the right to ask a client to increase the amount of capital he has in a Margin account, to sell the investor`s securities if the broker considers that his own resources are threatened. or to sue the investor if he does not fill a margin Call or if he has a negative balance on his account. If the equity of a Margin account falls below the margin maintenance level, the brokerage firm makes a margin call to the investor. In a number of days – usually within three days, although it may be less in a situation – the investor must deposit more cash or sell a few shares to compensate for all or part of the difference between the price of the security and the maintenance margin. – Request immediate payment.
require immediate payment of the Margin loan secured by these restricted securities; or, on the other hand, the brokerage firm calculates the interest on the Margin funds as long as the loan has not been granted, which increases the cost of the investor buying the securities. If the securities lose value, the investor will be underwater and will additionally have to pay interest to the broker. 2. Payment for transactions. You agree that you are responsible for paying for all transactions on your Margin account. If you purchase securities on Margin, you agree to deposit the necessary initial capital prior to the settlement date and to maintain your own funds at the required level. In addition, you agree to pay any remaining charges to your Margin account upon request, if your positions are liquidated to fulfill a margin call….