Activity in Margin Accounts

Read the Free Lesson → free · no signup wall

Chapters in this video

  1. 0:00 Restricted does not mean frozen: the 50% deposit rule
  2. 1:31 The 50% sales trap: SMA credit on sale proceeds
  3. 2:55 Cash versus securities withdrawal mechanics
  4. 4:28 Same-day trade netting and Reg T on net increase
  5. 6:46 Dividends vs. interest: opposite passive forces
  6. 7:56 Rapid-fire exam recap

What this video covers

  • Why a restricted account is not frozen: new purchases require a 50% deposit, but trading still happens
  • How sale proceeds credit 50% to Special Memorandum Account (SMA) in both restricted and unrestricted accounts, and why the old retention requirement no longer applies
  • The difference between cash withdrawals (reduce equity, increase debit) versus securities withdrawals (reduce long market value and SMA by 50% of value withdrawn)
  • Why the maintenance requirement floor, not SMA availability, is the hard limit on any withdrawal
  • How same-day purchases and sales are netted, with Regulation T (Reg T) applied only to the net increase in market value
  • Why cash dividends increase SMA dollar-for-dollar while interest charges increase the debit balance and erode equity
  • The exam distinction between 50% SMA credit on sales versus 100% dollar-for-dollar SMA increase on cash dividends and cash deposits

Read the full lesson, free

This video's complete written lesson is free to read in the CertFuel app, no signup wall. When you're ready to drill the topic, the full Series 7 course adds adaptive practice questions and spaced-repetition flashcards.

Start on this site: free Series 7 practice questions · Series 7 pass rate

Read the Free Lesson → free · no signup wall