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Can a margin account be restricted?

Such situations can lead to the account becoming restricted. A restricted account occurs when the equity is less than the required margin. However, being restricted doesn’t prohibit investors from buying (or short selling) securities in the margin account.

What is a restricted account?

A restricted account occurs when the equity is less than the required margin. However, being restricted doesn’t prohibit investors from buying (or short selling) securities in the margin account. They can still engage in these activities, provided they meet the margin requirement for the new transactions.

What is a margin account?

A “margin account” is a type of brokerage account in which your broker-dealer lends you cash, using the account as collateral, to purchase securities (known as “margin securities”). Brokerage firms may allow you to have both a margin account and a cash account at the same time.

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