DEFINITION of 'Remargining'

Remargining is the process of depositing additional cash or securities into a margin account for the purpose of meeting minimum margin requirements, after an investor has received a margin call because the securities they own have fallen in value.

BREAKING DOWN 'Remargining'

Remargining restores the minimum maintenance margin on a margin account, either by depositing more cash or selling some of the securities in the account.

The maintenance margin percentage varies among brokers, but in the United States, once an investor buys a security on margin, the maintenance margin goes into effect with FINRA requiring that at least 25% of the total market value of the securities be in the account at all times. Still, many brokers can require more as stipulated in the margin agreement. For example, Charles Schwab requires that the equity in an account be at least 30% of the current market value of the security.

However, the initial margin that is required, according to Regulation T is 50%. That is, investors may borrow up to 50% of the purchase price of securities bought using a loan from a broker, with the remaining 50% funded with cash. Investors opening a margin account must also make a deposit of cash or eligible securities totaling at least $2,000 in equity, as collateral for the loan.

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