 |
 |
The term margin is used especially in connection with transactions in securities and commodity futures. When securities are purchased “on margin,” the buyer supplies only a percentage, or margin, of the purchase price and borrows the remainder from his broker, pledging the security as collateral for the loan. A fall in the price of the security subsequent to the purchase reduces the margin available to the lender, and the customer may be called upon to restore his margin to a prearranged level. This level is determined by the lending broker but may not be below minimum levels stipulated by the organized exchange in which the transaction takes place. |