What Is a “Margin Call” and How Does It Relate to Collateral?
A margin call is a demand from a broker or exchange for an investor to deposit additional funds or collateral to bring their margin account back up to the required maintenance margin level. It is triggered when the value of the collateral backing a leveraged position falls below a certain threshold due to adverse market movements.
Failure to meet a margin call can result in the automatic liquidation of the position.
