What are the initial and maintenance margin requirements for purchasing listed securities at Kensington Capital?
The following requirements apply only to securities listed on the NYSE, AMEX, and NASDAQ. OTC Bulletin Board and Pink Sheets stocks are NOT margin eligible. As governed by the Federal Reserve’s Regulation T, when a trader buys on margin, key levels must be maintained throughout the life of the trade. First off, a broker cannot extend any credit to accounts with less than $2,000 in cash (or securities). Second, the initial margin of 50% is required for a trade to be entered. Finally, the maintenance margin says that an equity level of at least 25% must be maintained. The investor will be hit with a margin call if the value of securities falls below the maintenance margin. Securities valued less than $3 per share are not margin-eligible and therefore may not be sold short.
