A:

A maintenance margin call is a requirement to place more money into an account that is trading on margin to hold the current positions. In a margin account, the broker lends money to the investor to trade stock; the loan is collateralized by the securities and cash in the account. If the value of the securities in the margin account drops below a certain level, the investor receives a margin call. The account holder must then bring the value of the account up to the minimum maintenance margin requirement. If the margin call is not met, the account may be subject to forced liquidation of the assets in the account. A margin call may also be the result of a drop in value for option positions on stocks contained in an account.

Margin requirements differ based upon the asset being traded. FINRA Rule 4210 governs the margin requirement for accounts trading stocks. This is different from an account that is used to trade futures. In a futures trading account, the initial margin requirements are set by the exchanges and may vary across the type of product being traded. For example, the initial margin for one futures contract of corn may be $1,100, while the initial margin for an oil contract may be $5,000. Further, the margin amounts for futures are regularly updated by the exchanges depending on the value and volatility of the underlying contract. The margin in a futures account serves as a financial guarantee that both buyers and sellers of futures contracts will meet their financial obligations. Investors should understand how margin works for their accounts before trading stocks or futures contracts.

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