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margin requirement |
Also found in: Financial, Acronyms, Wikipedia | 0.03 sec. |
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margin requirement, that part of a security's price that a buyer must pay for in cash. The balance of the price is met by the broker, who, in effect, is supplying a client with a loan. The smaller the margin, the greater the inducement to speculation. Low margin requirements were considered an important cause of the 1929 collapse of the American stock market. In 1934, the Securities Exchange Act gave the Federal Reserve Board the power to regulate margin requirements. The amount has been reset at various times, but in recent years, the Federal Reserve has instituted a 50% margin requirement with a $2,000 minimum. |
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? Mentioned in | ? References in periodicals archive | |
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an increased margin requirement could come as a shock and encourage a round of position liquidation. These trade agreements also evade the two-thirds vote margin requirement for approval of treaties by the U. In particular, the Fed has the power to order increases in the margin requirement on broker loans, dampening stock market speculation. |
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margin requirement
