margin loan

margin loan
England, Wales
A loan (which is often combined with a borrower's own money) to buy shares or units in managed funds. Typically, the loan will be secured by cash or shares approved by the lender. The lender agrees to lend up to a certain limit based on the value of the security (the Security Value). If the Security Value falls below an agreed amount, the lender may make a margin call requiring the borrower to make good the shortfall. The borrower may do this by:
• Repaying part of the loan from existing cash resources.
• Providing additional security.
• Selling some of the shares which are being used as security and using the proceeds to repay part of the loan.
If the borrower does not meet the margin call within the specified time, the lender may sell sufficient shares and apply the sale proceeds in repayment of the loan so that it is reduced to the agreed amount.
See also stock lending

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

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  • Margin Loan Availability — 1. The dollar amount in an existing margin account that is currently available for purchasing securities. For new accounts, this represents the percentage value of the current balance that is available for future margin purchases. 2. The dollar… …   Investment dictionary

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  • margin lending — England, Wales See margin loan margin stock lending. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

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  • Loan origination — is the process by which a borrower applies for a new loan, and a lender processes that application. Origination generally includes all the steps from taking a loan application through disbursal of funds (or declining the application). Loan… …   Wikipedia

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  • margin regulations — USA Regulation U (12 CFR 221) (REG U) Regulation U. Also known as margin regulations. The Federal Reserve Board regulation that governs loans made by banks for the purpose of buying securities. The regulation is intended to protect investors and… …   Law dictionary

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