Margin call: Difference between revisions

Margin call (view source)

354 bytes added , 27 December 2022

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-{{a|pb|}}{{Pb margining capsule}}
+{{a|pb|}}{{d|{{PAGENAME}}|ˈmɑːʤɪn kɔːl|n}}
-What a creditor does to a debtor under a margin lending arrangement, if the value of the loaned assets drops in value and there is insufficient excess.
+What a [[prime broker]] does to a borrower under a [[margin lending]] arrangement, if the value of the assets it has lent against falls and the broker is worried there is not enough excess collateral value in the assets to cover a further sudden fall.
-:I lent you 70 against an asset worth 100, on the condition that the asset would be worth 30 more than my loan. <br>
+For example, a broker lends 70 against an asset worth 100, on the condition that the asset always is worth at least 30 more than the loan.l (hence “[[loan-to-value]]” ratio). <br>
-:The Asset has fallen in value to 90. <br>
+If the stock falls to 90, broker “calls” for another 10 of margin. If the client fails to pay it, the broker can sell a portion of the asset to meet the call, restoring the 70% [[LTV]].
-:I therefore call you for 10 of margin. <br>
 Here a “margin lending arrangement” could be a [[swap]], [[future]], [[stock loan]] or [[margin loan]] — any financial transaction where there one party invests in an asset on terms on which the other party (effectively) finances it.
+{{Pb margining capsule}}
 {{types of margin}}
+{{sa}}
+*[[Archegos]]
+*[[Margin]]
+{{ref}}