margin

The edge or border; the edge of a body of water where it meets the land. As applied to a boundary line of land, the "margin" of a river, creek, or other watercourse means the center of the stream. But in the case of a lake, bay, or natural pond, the "margin" means the line where land and water meet.

In finance, difference between market value of loan collateral and face value of loan. A sum of money, or its equivalent, placed in the hands of a broker by the principal or person on whose account a purchase or sale of securities is to be made, as a security to the former against losses to which he may be exposed by subsequent fluctuations in the market value of the stock. The amount paid by the customer when he uses his broker's credit to buy a security.

See also margin account

- margin transaction.

In commercial transactions the difference between the purchase price paid by a middleman or retailer and his selling price, or difference between price received by manufacturer for its goods and costs to produce. Also called gross profit margin.

See also profit

- remargining

@ margin account

Securities industry's method of extending credit to customers. Under such practice customer purchases specified amount of stock from securities firm by advancing only portion of purchase price, with brokerage firm extending credit or making loan for balance due, and firm maintains such stock as collateral for loan and charges interest on balance of purchase price. Margin account requirements are specified by regulations of Federal Reserve Board.

See 15 U.S.C.A. No. 78g. Stephens v. Reynolds Securities, Inc., D.C.Ala., 413 F.Supp. 50.

See also margin transaction

@ margin call

A demand by a broker to put up money or securities upon purchase of a stock, or, if the stock is already owned on margin, to increase the money or securities in the event the price of the stock has or is likely to fall since purchase. The last process (of maintaining the minimum required margin) is remargining.

See margin requirement

@ margin list

List of Federal Reserve Board which limits the loan value of a bank's stock to a certain per cent (e.g. 50%) of its market value. When a bank is not on the margin list, no limit is placed on the value of its stock for use as collateral

@ margin profit

See margin

- profit

@ margin requirement

The percentage of the purchase price that must be deposited with a broker to purchase a security on margin. The margin requirement is set or adjusted by the Federal Reserve Board

@ margin trading

See margin

- margin account

- margin transaction

@ margin transaction

The purchase of a stock or commodity with payment in part in cash (called the margin) and in part by a loan. Usually the loan is made by the broker effecting the purchase.

See also margin account

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