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Margin Rates
The current Broker Call Rate is 2.00% as of 12/19/2008. Regal's margin rates are 1/2 point above the current Broker Call Rate.
| Cash/Stock | $2,000 |
| Cash/Options/Stock | $2,000 |
| Margin/Options/Stock | $2,000 in marginable securities or cash |
Margin Guidelines
Additional requirements apply depending upon specific transactions and positions in your account. Trade stocks on margin with a market price as low as $3.00 per share. Margin maintenance ranges from 30% - 100% depending on the particular stocks in an account. Please note that not all stocks above $3 are automatically marginable.
Basic Minimum Equity Requirements
- Regular Margin - $2,000
- Short Sales - $2,000
- Spreads - $2,000
- IRA - $2,000 in cash - Naked Puts - $20,000
- Naked Calls - $100,000
- Naked Index - $500,000
- Equity and Index Spreads - $2,000
- Maintenance calls are due in three (3) business days under normal conditions.
- Stocks priced under $3.00 are not eligible for credit towards margin requirements and are not credited to buying power.
- If equity drops below house required minimum, or a call is issued for any other reason, you may be required to immediately sell securities or deposit additional funds promptly.
- Margin Maintenance is higher for concentrated accounts and may vary per security. At Regal, an account will be considered concentrated if the margin market value of any one position is greater then total margin account equity. In this instance an account will be coded, as "concentrated" and every margin position will be held at a minimum margin requirement of 10% greater than non-concentrated accounts.
- Our clearing firm, Penson Financial Services, Inc. may increase maintenance requirements from time-to-time because of overall firm concentration, or unusual market conditions. We further reserve the right to increase the requirements at our sole discretion.
- Covered Call Writing Requires a long stock position equal to the amount of exercisable calls.
- Debit Spreads - $2,000 minimum equity plus 100% of the debit amount upon initiating the transaction.
- Credit Spreads - $2,000 minimum equity plus 100% of the difference between the strike prices multiplied by the number of contracts.
At this time, we do not allow margin borrowing on cash secured short puts, short calls, naked or spread positions.
Equity Securities | Initial Requirements |
Maintenance Requirements |
| $5.00 and above | 50% | 30% |
| $4.99 to $3.00 | 50% | 50% |
| $2.99 and below | 100% | 100% |
Equity Securities | Initial Requirements |
Maintenance Requirements |
| Short sales below $3.00 | Not Allowed | Greater of $2.50 a share or 100% of CMV |
| Short sales below $5.00 | Same as maintenance. | Greater of $2.50 a share or 100% of CMV |
| Short sales $5.00 & above | 50% | Greater of $5.00 a share or 35% of CMV. Whichever is greater. |
Equity Securities |
Initial Requirements |
Maintenance Requirements |
| Leveraged 2x | 50% | 50% |
| Leveraged 3x | 75% | 75% |
| $2.99 and below | 100% | 100% |
Equity Securities |
Initial Requirement |
Maintenance Requirement |
| Leveraged 2x and above $5 | Same as maintenance | Greater of $5.00 a share or 60% of CMV |
| Leveraged 3x and above $5 | Same as maintenance | Greater of $5.00 a share or 90% of CMV |
| Short sales below $5 | Same as maintenance | Greater of $2.50 a share of 100% CMV |
| Short sales below $3 | Not allowed | Greater of $2.50 a share or 100% CMV |
Option Type |
Initial Requirement |
Maintenance Requirement |
| Naked Puts* | 20% of CMV minus out-of-money amount or 10% of Strike, whichever is greater times the multiplier times the quantity | 20% of CMV for in the money or 10% of Strike for out of the money times the multiplier times the quantity plus the market value of the option |
| Naked Calls* | 20% of CMV minus out-of-money amount or 10% of CMV, whichever is greater times the multiplier times the quantity | 20% of CMV minus out-of-money amount or 10% of CMV, whichever is greater times the multiplier times the quantity plus the market value of the option |
*A minimum of $.50/share (1 contract = 100 shares) will be held for any naked calls or puts.
Position limits are 2,000 contracts when going short and uncovered. The long position limits are determined by the exchange.
Margin Risks
Before trading stocks in a margin account, you should carefully review the margin agreement provided by your firm. Consult your firm regarding any questions or concerns you may have with your margin accounts.
When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firm’s collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, in order to maintain the required equity in the account.
It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:
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You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities or assets in your account(s).
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The firm can force the sale of securities or other assets in your account(s). If the equity in your account falls below the maintenance margin requirements, or the firm’s higher “house” requirements, the firm can sell the securities or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be responsible for any short fall in the account after such a sale.
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The firm can sell your securities or other assets without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities or other assets in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
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You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.
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The firm can increase its “house” maintenance margin requirements at any time and is not required to provide you advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account(s).
- You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
It is important that investors take time to learn the risks involved in trading securities on margin. Customers should contact Regal regarding any concerns they may have with their margin accounts.