Margin Call

An investor's margin account receives a margin call when its value drops below the limit set by the broker. Securities purchased using borrowed funds—typically a mix of the investor's own cash and funds borrowed from the investor's broker—are held in the margin account of an investor. An investor who receives a margin call from their broker is required to add more funds or securities to their account in order to bring it up to the maintenance margin, which is the minimum value that must be maintained in order to avoid a loss. When a margin call happens, the investor has two options: either add funds or marginable securities to the account, or sell part of their existing holdings.