Margin Balances

Margin Maintenance Call

After you purchase securities on margin, the NYSE and FINRA require a minimum amount of equity in your margin account. The NYSE and FINRA rules require that the account have at least 25 percent of the total market value of the securities in the margin account at all times. The 25 percent is called the "maintenance requirement." Our maintenance requirement is generally 30 percent, but some select securities may have a higher maintenance requirement.

If the equity in your account falls below our maintenance requirement, we'll issue a maintenance call and ask you to deposit more cash or margin-eligible securities into your account. If you are unable to meet the maintenance call, we will sell your securities of our choosing to increase the equity in your account up to or above the maintenance requirement. If four liquidations (whether initiated by us or you) occur in a 12 month period to meet a maintenance call, your account will be restricted from margin borrowing for 90 days.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Margin Maintenance Requirement

The margin maintenance requirement, AKA the "minimum maintenance" AKA "maintenance requirement", has a tongue-twisting definition. Here we go: The margin maintenance requirement is the minimum amount of equity that must be maintained in an account approved for margin borrowing. Our minimum maintenance rate for a margin eligible security is 30%, with some having a higher rate depending on our criteria of perceived risk.

If the equity in an account falls below the margin maintenance requirement, then the account may be subject to the dreaded maintenance call. If this happens we'll let you know by posting an alert message on your account.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Buying Power – Non-marginable securities

The buying power for non-marginable securities is just that, the money available to buy securities that are not margin eligible. The Federal Reserve Board regulates whether or not a security is considered margin eligible. A general rule used by brokerages is to consider the following non-margin eligible:

  • Penny stocks
  • Over-the-counter Bulletin Board (OTCBB) securities
  • Initial public offerings (IPOs)

Additionally, we may also designate some securities as non-margin eligible based on criteria which evaluate perceived risk. Securities that are determined to be non-margin eligible have an initial rate and maintenance rate of 100%.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Options Buying Power

You've probably got this one: Options Buying Power is the money available to buy options in an account approved for margin. Options are not margin eligible securities and have an initial rate and maintenance rate of 100%.

Please note: Options can be risky and aren't for all investors. Before investing in options, please read the Characteristics and Risks of Standardized Options.

Special Memorandum Account

The special memorandum account (SMA) reflects the balance of excess margin generated in a customer's account. The SMA multiplied by 2 generally represents the buying power balance of a margin account. The Following will result in increasing the value of your SMA balance:

  • Cash deposits into your Money Market sweep option
  • Dividend and interest payments
  • Proceeds from the sale of stock
  • At the completion of each trading day any increase in market value of the account's margin eligible securities

The following will result in decreasing the value of your SMA balance:

  • Cash withdrawals from your Money Market sweep option
  • Executed buy orders

Additional SMA Fun Facts

  • SMA does not decrease when the market value of margin eligible securities decreases.
  • At the completion of each trading day, we evaluate your new executed buy orders to determine if the account has enough equity or SMA to cover the initial requirements on the trades. If not, then a Fed Call, sometimes referred to as a Reg T Call, will be issued.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Important Information about this Money Market Fund

Investors should carefully consider the investment objectives, risks, charges and expenses of the Money Market Fund before investing. This and other important information is contained in the prospectus which should be read carefully before investing.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Performance data represents past performance and does not guarantee future results.

The fund's most recent 7-day yield may be lower or higher than the figure quoted. Yield and return will vary.

Performance data and other information may be obtained by calling 1-800-888-9723 from 8 AM to 5 PM ET, Monday through Friday.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Fed (Federal) Call

After the trading day has ended, we evaluate your new purchases to confirm if your account has enough equity or SMA to cover the initial requirements on the trades. If your equity isn't enough, then a Fed Call, i.e. a "Reg T Call", will be issued. If you receive a fed call don't panic, you can satisfy the call by depositing money in the amount of the call or depositing margin eligible securities valued at two times the amount of the call.

Time is important here, as a fed call must be satisfied within two business days of the settlement date. If you receive a fed call and do not meet the fed call, then we'll liquidate (sell) enough shares of our choosing in your account to meet the call. If shares are liquidated, whether by you or us, the cost of the trade is covered by you and the account can be restricted from margin borrowing for 90 days. In short, cover a fed call ASAP. Repeated violations may result in the removal of margin privileges.

For all the fun facts on our call procedures, or if you need some good night time reading go here: Margin Account Agreement.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Account Equity

Wondering what account equity is? This dollar amount is the total current market value (all of your stocks, ETFs, mutual fund and long option positions added together, less any short option positions), plus your Money Market balance less any margin loan balance. When borrowing on margin, we use the entire cash balance in your account before creating a margin loan balance.

Important: Cash is not included in the account’s margin buying power if your Cash Sweep Preference is set to FDIC Insured Cash. If it is set to Money Market Fund, it will be included in your account’s margin buying power.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Important information about the FDIC Insured Cash Balance

The FDIC Insured Cash Balance is held at Capital One 360, a division of Capital One, N.A., member FDIC. The FDIC Insured Cash Balance will be eligible for FDIC insurance up to $250,000 (including interest and principal) per depositor for all aggregated deposits held at Capital One, N.A.

Important Information about this Money Market Fund

Investors should carefully consider the investment objectives, risks, charges and expenses of the Money Market Fund before investing. This and other important information is contained in the prospectus which should be read carefully before investing.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Performance data represents past performance and does not guarantee future results.

The fund's most recent 7-day yield may be lower or higher than the figure quoted. Yield and return will vary.

Performance data and other information may be obtained by calling 1-800-888-9723 from 8 AM to 5 PM ET, Monday through Friday.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Buying Power

Buying Power, i.e. purchasing power, is the amount available to buy margin eligible securities (if approved for margin of course). Your buy orders will always use your cash balance before using margin credit. In short, if your buy order exceeds your cash balance a margin loan balance is created. Here's a basic formula for buying power, but it does not apply to all scenarios:

2 x (Money Market balance + (50% x marginable securities) - Loan Amount)

Important: Cash is not included in the account’s margin buying power if your Cash Sweep Preference is set to FDIC Insured Cash. If it is set to Money Market Fund, it will be included in your account’s margin buying power.

Tip: Non-marginable securities do not contribute to your buying power. Also, some margin eligible securities may have an initial rate higher than 50%, which reduces your buying power.

Even if you do not have cash or currently have a margin loan balance, you may still be able to purchase additional securities if your buying power is greater than zero.

Your buying power may move up and down as the value of your securities change throughout the day. Transactions that may change your buying power include:

  • Executed buy and sell orders
  • Open buy and sell orders
  • Deposits and withdrawals from your Money Market sweep option

When using your buying power for a security purchase, the buy order cannot put the account into a maintenance call. Also keep in mind, your account will not have buying power if the equity in the account drops below the minimum equity requirement.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Important information about the FDIC Insured Cash Balance

The FDIC Insured Cash Balance is held at Capital One 360, a division of Capital One, N.A., member FDIC. The FDIC Insured Cash Balance will be eligible for FDIC insurance up to $250,000 (including interest and principal) per depositor for all aggregated deposits held at Capital One, N.A.

Important Information about this Money Market Fund

Investors should carefully consider the investment objectives, risks, charges and expenses of the Money Market Fund before investing. This and other important information is contained in the prospectus which should be read carefully before investing.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Performance data represents past performance and does not guarantee future results.

The fund's most recent 7-day yield may be lower or higher than the figure quoted. Yield and return will vary.

Performance data and other information may be obtained by calling 1-800-888-9723 from 8 AM to 5 PM ET, Monday through Friday.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Initial Rate (Initial Margin Requirement)

The initial rate, i.e. the initial margin requirement, for a security is the percentage of the Money Market balance or marginable securities needed in your account against the total purchase price of a margin eligible security. The majority of securities that can be purchased on margin have an initial rate of 50%; however, we may require a higher initial rate for some securities based on perceived risk.

Fun Fact: The 50% minimum is established by Regulation T of the Federal Reserve board.

The buying power balance presented on our website is calculated using an initial rate of 50%. Securities being purchased which require a higher initial rate will reduce your account's buying power.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Important Information about this Money Market Fund

Investors should carefully consider the investment objectives, risks, charges and expenses of the Money Market Fund before investing. This and other important information is contained in the prospectus which should be read carefully before investing.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Performance data represents past performance and does not guarantee future results.

The fund's most recent 7-day yield may be lower or higher than the figure quoted. Yield and return will vary.

Performance data and other information may be obtained by calling 1-800-888-9723 from 8 AM to 5 PM ET, Monday through Friday.

An investment in the fund is not a deposit in a bank, and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Margin Loan Availability

Need some cash? This is the dollar amount available to withdraw for use outside of your ShareBuilder margin account (if approved for margin of course). If you have a positive cash balance in your account, this cash is withdrawn first before the margin loan availability amount is used (the loan availability shown does not include the cash balance). Before setting up your withdrawal, remember that money borrowed from us in the form of a margin loan is subject to margin interest.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.

Margin Loan Balance

The Margin Loan Balance represents the amount you currently owe us after borrowing money to either purchase securities or to use outside of your margin approved account. Your margin loan balance is the amount on which you will pay margin interest.

Tip: While margin can boost an investment strategy, buying securities on margin is not for everyone. Before investing on margin, please give the Margin Account Agreement the once over to review important risk disclosure information, and see our margin interest rates.