Remargining

AAA

DEFINITION of 'Remargining'

The process of bringing an account up to minimum equity standards by depositing more cash or equity. This typically occurs after the account holder has received a margin call.

When a stock is purchased on margin in a margin account, the account holder is required to maintain certain levels of equity in that account. When these requirements are not met, the brokerage firm will require that additional cash or securities be deposited to bring the account up to minimum equity levels.

INVESTOPEDIA EXPLAINS 'Remargining'

When an individual purchases stock on margin, he or she must maintain equity in the account of up to 50% of the total value of the securities margined, or borrowed. If the stock should decline in value, the brokerage firm may issue a margin call, which is essentially a demand for the account owner to boost the equity position to the minimum requirement. When a person does this, he or she is said to be remargining the account.

RELATED TERMS
  1. Borrowed Capital

    Funds borrowed from either individuals or institutions. Borrowed ...
  2. Margin

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

    A broker's demand on an investor using margin to deposit additional ...
  4. Margin Account

    A brokerage account in which the broker lends the customer cash ...
  5. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
  6. Leverage

    1. The use of various financial instruments or borrowed capital, ...
RELATED FAQS
  1. What is the difference between leverage and margin?

    In financial terms, leverage is reinvesting debt in an effort to earn greater return than the cost of interest. When a firm ... Read Full Answer >>
  2. What is a margin account?

    A margin account is an account offered by brokerages that allows investors to borrow money to buy securities. An investor ... Read Full Answer >>
  3. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  4. How does a broker decide which customers are eligible to open a margin account?

    Brokers have the sole discretion to determine which customers may open margin accounts with them, although there are regulations ... Read Full Answer >>
  5. Are there leveraged ETFs that follow the retail sector?

    There are many exchange-traded funds (ETFs) that track the retail sector or elements of the retail sector, and some of those ... Read Full Answer >>
  6. What is the interest rate offered on a typical margin account?

    Interest rates on margin accounts vary according to the size of the loan and the brokerage firm being used. Generally, interest ... Read Full Answer >>
Related Articles
  1. Options & Futures

    How Does Your Margin Grow?

    Risk-management tool SPAN margin boosts profitability prospects by helping to determine when to exit a trade.
  2. Options & Futures

    Margin Trading

    Find out what margin is, how margin calls work, the advantages of leverage and why using margin can be risky.
  3. Brokers

    10 Most Famous Public Companies That Went Private

    Here’s a list of the most popular listed companies that went private in recent decades.
  4. Mutual Funds & ETFs

    5 Disadvantages of Mutual Funds Compared to ETFs

    In the mutual funds vs. exchange-traded funds debate, ETFs have some clear advantages.
  5. Mutual Funds & ETFs

    ETF Analysis: Direxion Small Cap Bull 3X

    Read about a triple-leveraged exchange-traded fund that aims for 300% of the returns of the Russell 2000 Index: the Direxion Small Cap Bull 3X.
  6. Mutual Funds & ETFs

    ETF Analysis: Direxion Daily 20 Year Treasury

    Read about one potent, yet volatile, way to bet on rising interest rates -- the Direxion Daily 20 Year Plus Treasury Bear 3X exchange-traded fund (TMV).
  7. Fundamental Analysis

    Calculating the Net Debt to EBITDA Ratio

    Financial analysts typically use the net debt to EBITDA ratio to determine a company’s ability to pay its debt.
  8. Trading Strategies

    Will Higher Interest Rates Hurt Trading Activities?

    Do higher interest rates lead to less trading and lower interest rates lead to more trading? Investopedia debunks common myths around interest rates and trading.
  9. Fundamental Analysis

    How to Create a Personal Risk Management Plan

    Investors should consider these strategies to establish a risk management plan.
  10. Stock Analysis

    Should You Short These Debt-Laden Stocks?

    These stocks have high debt-to-equity ratios making them prime candidates to short.

You May Also Like

Hot Definitions
  1. Topless Meeting

    A meeting in which participants are not allowed to use laptops. A topless meeting organizer can also ban the use of smartphones, ...
  2. Hedging Transaction

    A type of transaction that limits investment risk with the use of derivatives, such as options and futures contracts. Hedging ...
  3. Bogey

    A buzzword that refers to a benchmark used to evaluate a fund's performance. The benchmark is an index that reflects the ...
  4. Xetra

    An all-electronic trading system based in Frankfurt, Germany. Launched in 1997 and operated by the Deutsche Börse, the Xetra ...
  5. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  6. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!