A margin call is a demand for equity, and the broker does not have to make it before selling. The SEC's margin bulletin states that a firm can sell securities at any time without consulting the customer first, that the customer does not choose which securities are sold, and that nobody is entitled to an extension of time. The threshold that triggers all of it is FINRA's maintenance requirement, which the same bulletin puts at a minimum of 25 percent of market value.

Worked example: $16,000 of stock on an $8,000 loan

This is the SEC bulletin's own case. Buy $16,000 of securities with $8,000 of cash and an $8,000 margin loan. The market value falls to $12,000. The loan is unchanged, so the equity is $12,000 minus $8,000, or $4,000.

Against the FINRA floor the account is fine: 25 percent of $12,000 is $3,000, and $4,000 clears it. Against a firm with a 40 percent house requirement it is not: 40 percent of $12,000 is $4,800, and the equity is $800 short. That $800 is the call.

Solve for the prices at which each threshold bites. Equity equal to 25 percent of value means value minus $8,000 equals 0.25 times value, so value is $10,666.67 — a 33.3 percent fall from $16,000. At 40 percent the same equation gives $13,333.33, a fall of only 16.7 percent. Half the distance to the regulatory floor is consumed by the house rule, and the house rule is the one the account actually lives under.

The rule behind the threshold

FINRA Rule 4210(c) sets the maintenance minimum at 25 percent of the current market value of all margin securities held long in the account. Short positions carry more: the greater of $5.00 per share or 30 percent of current market value for stock at $5 or above, and the greater of $2.50 per share or 100 percent of market value below $5. Those are floors, not the numbers most accounts see. The SEC's bulletin notes that firms commonly run 30 to 40 percent, and sometimes higher depending on the security, and can raise the requirement at any time without advance notice.

The 2026 change is on the day-trading side of the same rule. FINRA's intraday margin standards became effective 4 June 2026, with a transition period running to 20 October 2027 for firms that need longer, and under them there is no $25,000 minimum equity requirement and no pattern day trader designation based on counting trades. The maintenance minimum of 25 percent of current market value for long positions carries through. Which framework applies to a given account depends on the broker's own timetable, covered in the guide on the day-trading margin transition.

Liquidation is the firm's remedy, not a penalty

The margin agreement makes the securities collateral, so the firm's recovery is to sell them. The bulletin's list is blunt: an investor can lose more than the amount invested, can be forced to sell when prices fall, and cannot pick which holdings go. Schwab's futures disclosure uses the same language on the other side of the house, warning that the firm can liquidate any or all positions at any time if account equity drops below required margin levels and that the customer is liable for any resulting debit.

Order of operations matters here. The sale happens at whatever the market offers at that moment, not at the price that triggered the call, and a forced sale in a falling market is a market order in a thin book. The guide on what a stop order cannot promise covers the same fill problem in a different wrapper.

The two numbers to keep in view

Equity divided by market value is the ratio the firm watches; the house requirement is the line it is compared against. Both move — equity with every tick, the requirement at the firm's discretion. Running the example above in reverse gives the price that produces a call: multiply the loan by one divided by one minus the requirement, and the result is the market value at which equity hits the line. On an $8,000 loan at 40 percent that is $13,333.33. The loan side of that equation is explained in the guide on cash and margin accounts, and the magnification it produces in the guide on how leverage changes the size of a move.

Source references

Primary sources used for this guide. Follow the links for the original scope, definitions and conditions.