Close Navigation
Learn more about IBKR accounts

Margin Call

Trading Term

A margin call is a situation where a broker demands that an investor deposits more money or securities into their margin account to meet the required minimum margin level. This typically happens when the value of the securities in the margin account falls below a certain threshold, causing the account’s equity to drop below the required margin.

Here’s how it works in simpler terms:

  • Margin Account: When you buy securities (stocks, bonds, etc.) on margin, you’re borrowing money from a broker to make the purchase. The margin is the portion of the purchase that you pay for with your own funds, and the rest is borrowed.
  • Maintenance Margin: Brokers require you to maintain a certain level of equity (your own money) in the margin account. This is known as the maintenance margin.
  • The Margin Call: If the value of your investments falls, and your account equity drops below the required maintenance margin, the broker will issue a margin call. This means you have to add more funds or securities to your account to bring it back up to the required level.

If you don’t meet the margin call, the broker may sell some of your assets to cover the shortfall, often at a loss to you. It’s a way for the broker to protect themselves from the risk of lending money to an investor who can’t pay it back.

Note:  Interactive Brokers does not make margin calls. Instead, real-time liquidations occur when an account has a margin deficiency. Due to fast-moving markets, accounts generally will not have time to deposit funds to meet a margin deficiency. While IBKR attempts to send margin deficit notifications on a best-efforts basis, this may not always be possible.

To monitor margin compliance, users should track their Excess Liquidity and Special Memorandum Account (SMA) values, which can be viewed in TWS under Account > Account Window in the Available for Trading section.

IBKR Campus Newsletters

This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.