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You receive a margin call—now what?

Learn about the different types of margin calls and what to do if you get one.


  • Federal regulators set the rules for buying on margin.
  • Vanguard Brokerage also has "house maintenance" requirements to maintain a margin account with us.
  • There are 3 types of margin calls, each with different equity requirements.

Rules for margin investing

The Federal Reserve Board (FRB) and Financial Industry Regulatory Authority (FINRA) set industry rules for investing on margin.

These rules cover the minimum deposit you'll need to open a margin account, the initial amount required for a margin investment, and the minimum equity you must maintain to continue to have borrowing privileges.

In addition, Vanguard Brokerage has initial and house maintenance requirements.

If you don't meet the requirements, you'll receive a "margin call"—a demand to increase the equity in your account to cover the call.

The 3 types of margin calls

Federal (initial) margin call

You'll get this call when you don't have enough equity to meet the FRB's initial requirement as determined by Regulation T.

The initial requirement is 50% of the total cost of the trade, including commissions, unless the stock is priced under $5. In that case, it's 100%. A federal call is only issued as a result of a trade.

What you should do: You must meet the call by the trade date plus 4 business days.

Maintenance (house) call

You'll get this call when your equity falls below Vanguard Brokerage's house maintenance requirement, which is 35% for most marginable securities.

Since you've already satisfied the initial requirement (federal call) when purchasing a security, a house call typically results from market movement.

Maintenance requirements are based on a stock's current market value, not its purchase price. So you can get a house call if the price declines; on the other hand, a price increase can reduce or eliminate the house call.

For a short position, it's the opposite. You can get a house call if the price increases, while a price decrease can reduce or eliminate the house call.

We issue the house call—usually via an automated message sent to your email address on file—the morning after (known as Day 1) the equity in your account falls below the house minimum.

What you should do: You must meet the call by Day 4.

Exchange (NYSE) call

You'll get this call when your equity falls below the New York Stock Exchange (NYSE) requirement, currently at 25%.

If you get an exchange call, your account probably was already in a house call.

What you should do: It's critical that you cover an exchange call within 2 days.

How to satisfy a margin call

You can satisfy a margin call in 1 of 4 ways:

Sell securities in your margin account. Or buy securities to cover short positions.

Send money to your account by electronic bank transfer, wire, or check by overnight mail.

Sell or exchange Vanguard mutual funds from an account held in your name and use the proceeds to purchase shares of your money market settlement fund.

Deposit fully paid marginable securities into your margin account, sending endorsed security certificates to Vanguard Brokerage or moving securities from another brokerage account.

While you can choose how you want to meet a margin call, you must meet it by the due date. If you don't, we reserve the right to sell the securities and other property in your account to cover the call—and you won't be able to choose what's sold or liquidated.

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Federal Reserve Board (FRB)

The governing board of the Federal Reserve System that is responsible for setting bank reserve requirements, the discount rate, credit availability, and monetary policies.

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Financial Industry Regulatory Authority (FINRA)

The largest nongovernmental regulator for all securities firms doing business in the United States. FINRA was created in 2007 through the consolidation of the National Association of Securities Dealers and the New York Stock Exchange's member regulation unit.

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Margin account

A brokerage account that allows you to borrow a percentage of a security's value from the broker to purchase that security. If the value of the stock drops substantially, you're required to deposit more cash in the account or sell a portion of the stock.

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In a margin account, the value of your securities minus the amount you've borrowed from your brokerage firm.

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Trade date

The actual date on which shares are purchased or sold.

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Marginable security

A security that meets the Federal Reserve requirements for being bought and sold in a margin account.

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Mutual fund

A type of investment that pools shareholder money and invests it in a variety of securities. Each investor owns shares of the fund and can buy or sell these shares at any time. Mutual funds are typically more diversified, low-cost, and convenient than investing in individual securities, and they're professionally managed.

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Settlement fund

A money market mutual fund that holds the money you use to buy securities, as well as the proceeds whenever you sell.