Forced Liquidation

AAA

DEFINITION of 'Forced Liquidation'

An action taken by brokerage houses that offsets and closes all positions within delinquent customer accounts in order to reduce exposure.

INVESTOPEDIA EXPLAINS 'Forced Liquidation'

Forced liquidations generally occur after warnings have been issued by the broker regarding the under-margin situation of an account. Should the account holder choose not to meet the margin requirements, the broker has the right to sell off the positions.

RELATED TERMS
  1. Liquidation Value

    The total worth of a company's physical assets when it goes out ...
  2. Voluntary Liquidation

    A corporate liquidation that has been approved by the shareholders ...
  3. House Call

    A brokerage house notification that the customer's equity in ...
  4. Initial Margin

    The percentage of the purchase price of securities (that can ...
  5. Margin

    1. Borrowed money that is used to purchase securities. This practice ...
  6. Margin Call

    A broker's demand on an investor using margin to deposit additional ...
Related Articles
  1. 7 Investing Mistakes And How To Avoid ...
    Investing Basics

    7 Investing Mistakes And How To Avoid ...

  2. Margin Trading
    Options & Futures

    Margin Trading

  3. Pick the Right Brokerage Account for ...
    Options & Futures

    Pick the Right Brokerage Account for ...

  4. Can real estate agents give referral ...
    Home & Auto

    Can real estate agents give referral ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center