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Zorluk: Çok zorMargin Accounts and Borrowing Requirements

Prior to executing any trades, a client establishes a margin account at a broker-dealer and sells short 100100 shares of XYZ common stock at $14\$14 per share as the account's first transaction. The client subsequently submits an initial cash deposit of $1,000\$1,000. To remain fully compliant with Federal Reserve Regulation T and FINRA initial margin requirements, how much additional cash must the client deposit?

  1. A
    $0\$0
  2. B
    $400\$400
  3. $1,000\$1,000Cevap
  4. D
    $1,700\$1,700

Cevap

An additional cash deposit of $1,000\$1,000 is required.
For a short sale in a new margin account, Regulation T requires 50% of the total transaction value (700),butFINRArulesmandateaminimuminitialequitydepositof700), but FINRA rules mandate a minimum initial equity deposit of 2,000 regardless of trade size. Because the governing requirement is the greater of the two (2,000)andtheinvestorhasalreadydeposited2,000) and the investor has already deposited 1,000 in cash, an additional $1,000 deposit is necessary to meet the required initial margin.

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1
Calculate the total market value of the short transaction.
Total Market Value=100 shares×$14/share=$1,400\text{Total Market Value} = 100 \text{ shares} \times \$14/\text{share} = \$1,400.
Initial margin calculations require establishing the total contract value of the trade.
2
Determine the Regulation T initial requirement.
Reg T Requirement=50%×$1,400=$700\text{Reg T Requirement} = 50\% \times \$1,400 = \$700.
Federal Reserve Regulation T specifies a 50% initial margin requirement on equity positions.
3
Determine the FINRA minimum initial equity requirement for short sales.
FINRA Initial Requirement=$2,000\text{FINRA Initial Requirement} = \$2,000.
FINRA Rule 4210 mandates an absolute minimum initial equity deposit of $2,000 for short sales, regardless of how low the total market value of the transaction is.
4
Calculate the net additional cash required after accounting for the initial cash deposit.
Additional Cash Needed=$2,000−$1,000=$1,000\text{Additional Cash Needed} = \$2,000 - \$1,000 = \$1,000.
The customer must meet the greater of the Reg T requirement (700)ortheFINRAminimumrequirement(700) or the FINRA minimum requirement ( 2,000). Since 1,000wasalreadydeposited,theremainingrequireddepositis1,000 was already deposited, the remaining required deposit is 1,000.

Anahtar Kavram

FINRA Minimum Initial Equity Rule for Short Sales
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Konular

Margin Accounts and Borrowing Requirements