If a stock has a higher volatility, would your broker would want to set the maintenance margin percent higher or lower?
Maintenance margin is minimum margin amount that we need to maintain as an investor after the purchase of stock on margin. Also there is a limit on minimum maintenance margin percentage that all th brokers charge from their customers.
The investor may be hit with the margin call if equity account margin falls below that minimum percentage or the limit being set by brokerages.
As per FINRA (Financial Industry Regulatory Authority) minimum maintenance margin is 25% currently of the total value of securities purchased under margin.
Also this margin will increase if value of securities under margin will increase.
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