Maintenance Margin

Maintenance margin is the equity or collateral that must remain in a margin account or leveraged position after the position has been opened. If account equity falls below the applicable requirement, the broker or clearing system can demand more collateral, restrict trading, or reduce the position.

Maintenance margin matters because it is the line between a position that can continue and a position that requires action. It is especially important during volatility because collateral value can change faster than an investor can add cash.

Key Takeaways

• Maintenance margin is the ongoing requirement, while initial margin is the opening requirement.
• It can be set by FINRA, exchanges, clearinghouses, and broker house policy.
• The same security can have different maintenance requirements at different brokers or under different account conditions.
• Falling below maintenance margin can lead to a margin call or forced liquidation.
• Futures and derivatives markets may apply daily mark-to-market and variation margin alongside maintenance requirements.

Example

Suppose a margin account holds $30,000 of securities and has a $12,000 margin loan. Account equity is $18,000 before accrued interest and other adjustments.

If the securities fall to $24,000, the loan is still $12,000, so equity falls to $12,000. Whether that is enough depends on the current maintenance requirement, the security, concentration, broker policy, and any product-specific rules. If the requirement is higher than the remaining equity, the account may face a margin call.

Maintenance Margin vs. Initial Margin

What Can Reduce The Cushion?

• falling market value of collateral
• margin interest and fees
• increased house requirements
• concentrated positions
• hard-to-borrow or short positions
• option, futures, or portfolio-margin stress scenarios
• securities becoming non-marginable or less eligible

Common Mistakes

• Treating maintenance margin as a safe cushion rather than a minimum requirement.
• Assuming the broker must wait before selling collateral.
• Ignoring how a price gap can bypass planned exit levels.
• Assuming a diversified-account requirement applies to a concentrated position.

Official Sources

• FINRA Rule 4210: Margin Requirements
• FINRA: Margin Accounts
• SEC: Margin, Borrowing Money to Pay for Stocks

Related Terms

• Initial Margin: Equity or collateral required to open a position.
• Margin Call: Action required after falling below a margin requirement.
• Margin Loan: Broker credit that increases the need to monitor maintenance margin.
• Buying Power (Excess Equity): Capacity that can shrink as maintenance margin rises.
• Mark to Market: Revaluation process that can affect collateral and equity.