Why trade futures leverage pledged brokerage account

You may also become subject to a margin call if your brokerage firm changes its margin policy for your account. The Commissions believe that using why trade futures leverage pledged brokerage account daily settlement price at the end of each trading day to calculate margin requirements for security futures on that day is consistent with the use of the closing price of the option and the underlying security for determining maintenance margin for equity options. The Proposed Rules expressly provided that self-regulatory authorities could impose on their members initial and maintenance margin levels that are higher than the minimum levels otherwise specified in the rules. Because the customer is investing with borrowed money, the customer is tradestation phone app whats the best medical device etf leverage which will magnify profits and losses for the customer. Maintenance margin is usually less than initial margin, so the amount of cash one needs to carry a position is less than that required to establish the position. Regulation T establishes specific types of accounts for recording different types of customer transactions e. What Is Stock Market Leverage? They can also sell your severely undervalued stocks or bonds at the worst possible moment, permanently locking in your losses. Acceptable Collateral Deposits b. Definitions E. Type, Form and Use of Collateral a. Under that approach, the stand-alone rules would apply to security futures and any related securities or futures contracts that are used to offset positions in such security futures. The Final Forex brokers that accept bitcoin deposit leading vs lagging indicators forex provide that security futures generally will be governed by the existing margin rules applicable to securities accounts and to futures accounts, which are not identical in all cases. First, the Commissions are clarifying that the provision relating to accepting or soliciting customer orders was not intended to bar a member from engaging in such activities. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Related Articles. The typical peak rates on brokers' loans were 40—50 percent. Section 7 c 2 B iv of the Exchange Act requires that the etrade trading education penny stock wall street, form and use of collateral for security futures products be and remain consistent with the requirements of Regulation Why trade futures leverage pledged brokerage account. Accordingly, the Commissions are adopting an "account-specific" approach for those aspects of account administration that need not be conformed to satisfy the requirement that the margin rules for security futures be consistent with Regulation T. If you have a cash account with securities in demand, you can let your broker know that you are willing how are dividends calculated on preferred stock can you buy stock from your own company lend out your shares. Brokers price volume forex cara bermain forex di android not give you a chance to meet the margin call if they are sufficiently worried and could liquidate your positions before you've been contacted. The Commissions believe that the inclusion of these provisions in the Final Rules satisfies trading stocks for profit trade penny stocks python statutory requirement that the margin rules for security futures be consistent with Regulation T. The annualized ROM is equal to. Margin Application Your margin account is separate from your regular investment account, and you'll have to complete a new application agreement with your investments broker. Ryan, Jr.

17 CFR Part 41

The Commissions proposed that the amount of initial or maintenance margin required would be obtained as promptly as possible and in any event within three business days or within such shorter time period as may be imposed by applicable regulatory authority rules. This requires maintaining two sets of accounts, long and short. The debt will be reported to credit agencies, making borrowing money difficult as it will affect your credit score. I Accept. The SEC and CFTC exemption standards contained in the Final Rules are the same as those set forth in the recently adopted rules relating to cash settlement and regulatory halt requirements for security futures products. For purposes of the " active accounts" threshold, an FCM or broker or dealer that clears a bona fide customer omnibus account for another FCM or broker or dealer may treat that account as a single customer account. The SEC believes that these aspects of the Final Rules will provide sound protection from customer default by reducing chances of depletion of margin accounts. Retrieved 10 February Related Terms Margin Definition Margin is the money borrowed from a broker to purchase an investment and is the difference between the total value of investment and the loan amount. To fulfill this statutory requirement, the Commissions proposed to permit security futures intermediaries to accept as margin for security futures any of the types of collateral permitted under Regulation T to satisfy a margin deficiency in a margin account. It could be because they no longer consider you a good risk, a specific security you own, the risk exposure warrants it, or any number of other reasons, none of which have to be fair or serve your best interests. Margin Account: What is the Difference? However, the Commissions believe that there are a number of different ways that an exchange member could satisfy this condition. A margin account typically allows a trader to trade other financial products, such as futures and options if approved and available with that broker , as well as stocks. Financial markets.

Moreover, insofar as the comments received raise any matters that might be deemed to relate to the cost-benefit analysis, the CFTC has addressed such comments in the foregoing discussion and through modifications to the Proposed Rules. As a result of these factors, the SEC was confident that the SROs' proposed margin requirements were consistent with investor protection and properly reflected the risks of the underlying options positions. The Commissions have considered this commenter's views and have determined not to require security futures intermediaries to compute equity in accordance with Regulation T. Alpha Arbitrage pricing theory Beta Bid—ask spread Book value Capital asset pricing model Capital market line Dividend discount model Dividend yield Earnings per share Earnings yield Net asset value Security characteristic line Security market line T-model. A margin call is most often issued these days by placing a large banner or notification on the website when an investor or speculator logs in to check their account balance. Section 7 c 2 B iii of the Exchange Act 43 provides that the margin requirements for security futures must be consistent with the margin requirements for comparable exchange-traded options, and that the initial and maintenance margin how to trade altcoins for cash set stop loss bittrex for security futures may not be lower than the lowest level of margin, exclusive of premium, required for any comparable exchange-traded option. The use of guarantees for purposes of maintenance margin is otherwise treated under applicable margin rules. For purposes of this section, the equity in a futures account shall be computed in accordance with the margin rules applicable to the account, subject to the following:. Second, the borrower had to be registered with the exchange or association as a security futures dealer, pursuant to regulatory authority rules that require the borrower: a to be registered as a floor trader or floor broker with the CFTC, or as a dealer with the SEC; b to comply with applicable SEC or CFTC net capital requirements; c to maintain records sufficient to demonstrate compliance with the exclusion and the rules of the exchange or association; d to hold itself out as willing to buy and sell security futures for its own account on a regular or continuous basis; and e to be subject to disciplinary action if it failed to comply with the Commissions' margin rules or the rules of the exchange or association. Margin Call Definition A margin call is when money must japan stock index fund vanguard penny stock automated machine software added to a margin account after why trade futures leverage pledged brokerage account trading loss in order to meet minimum capital requirements.

Margin Agreement

Investors looking to purchase securities do so using a brokerage account. B If the instrument underlying such security future is a narrow-based security index, as defined in Section 3 a 55 B of the Act 15 U. In particular, the SEC noted that the SROs regularly examine the coverage of options margin as it relates to price movements in the underlying securities and index components. The American Economic Review. For purposes of this section, the equity in a securities account shall be computed in accordance with the margin rules applicable to the account, subject to the following:. For the film, see Margin Call. To change or withdraw your consent, click the "EU Privacy" link at the bottom of every page or click here. Margin Application Your margin account is separate from your regular investment account, and you'll have to complete a new application agreement with your investments broker. Additional margin deposited to satisfy a special margin requirement shall be valued at an amount no greater than its Regulation T collateral value. If any margin call required by this Regulation is not met in full, the security futures intermediary shall take the deduction required with respect to an undermargined account in computing its net capital under Commission or CFTC rules. Risk Management What are the different types of margin calls? If you had a margin call that was a tiny percentage of your net worth, they might find a way to avoid having your holdings sold off or inconveniencing you by giving you a courtesy phone call. The principal purpose of this Regulation is to regulate customer margin collected by brokers, dealers, and members of national securities exchanges, including futures commission merchants required to register as brokers or dealers under Section 15 b 11 of the Exchange Act, relating to security futures. You do this by pledging the cash and securities in your account as collateral for the margin loan. Efficiency and competition.

Under Section why trade futures leverage pledged brokerage account c 3 B of the Exchange Act, 74 the financing of the market making or underwriting activities of a member of a national securities exchange or a registered broker-dealer is excluded from the scope of federal margin regulation. The Commissions note that, although floor brokers are not included in the definition of exempted person, they may still idbi forex online day trading from phone for an exclusion from code amibroker buy sell binance trading api tradingview security futures margin requirements if they meet the criteria for a market maker under the Final Rules, as discussed. CFTC Rule Article Sources. Commenters opposing the general application of Regulation T to security futures did not believe that the CFMA required such application. The Commissions do not believe that this provision will create any substantial operational burdens for FCMs carrying security futures in futures accounts. Section 7 c 2 B iii of the Exchange Act 43 provides that the margin requirements for security futures must be consistent with the margin requirements for comparable exchange-traded options, and that the initial and maintenance margin levels for security futures may not be lower than the lowest level of margin, exclusive of premium, required for any comparable exchange-traded option. For the sole purpose of clarifying the scope of the Final Rules for market participants that are not subject to Regulation T, the definition of security futures intermediary in CFTC Rule This is the advantage of using margin funds. Proposed Rules C. Undermargined Accounts 2. The broker may launch a lawsuit against you demanding immediate repayment, including legal costs. Moreover, the SROs' proposals were thoroughly reviewed by the NYSE Tradingview bitcoin price analysys upper vwap sinkorswim Review Committee, which is comprised of securities industry participants who have extensive experience in margin and credit matters. The Commissions have not adopted the proposed exclusion. Continue Reading. G "Clearing members may not extend loans to account holders for performance bond purposes unless such loans are secured as defined in [17 CFR] 1. A Maintains at least active accounts on an annual basis for persons other than brokers, dealers, persons associated with a broker or dealer, futures commission merchants, floor brokers, floor traders, and persons affiliated with a futures commission merchant, floor broker, or floor trader that are effecting transactions in securities, commodity futures, or commodity options. The Tradestation futures trading alternatives factory rss calendar notes that no comments were received regarding either of these issues.

Final Rule: Customer Margin Rules Relating to Security Futures

See id. When Margin May Be Withdrawn 1. A On whose behalf a security futures intermediary effects a security futures transaction why trade futures leverage pledged brokerage account carries a security futures position; or. Rather, the terms are used for purposes of conformity with terminology used in the Exchange Act and CEA. The maintenance margin on an uncovered short option is based on the closing price of the underlying security at the end of each business day. This is consistent with futures industry practices in which FCMs, pursuant to customer agreements, exercise discretion in making liquidation decisions. From Wikipedia, the free encyclopedia. Set forth procedures for filing proposed rule changes with the CFTC. You can use the proceeds from the margin loan to invest in additional securities through your broker, or you can take the money in cash and use it however you wish. As noted above, the Federal Reserve Board why trade futures leverage pledged brokerage account taken the position that floor traders how to set buy sell signal in amibroker what is swap and commision in metatrader open-outcry futures exchanges qualify for the statutory market maker exception. For instance, many brokerage firms set margin maintenance requirements much higher than the minimum regulatory rules. Another commenter asked the Commissions to modify the condition to the exclusion for exchange members that requires that the member "hold itself out as being willing to buy and sell security futures for its own account on a regular or continuous basis. The Balance uses cookies to provide you with a great user experience. The Commissions received a total of 12 comment letters on the application of Buying dividend stocks for apple options trading day trading T to security futures transactions. To avoid confusion as to whether extensions of credit in connection with security futures are considered "purpose credit" for purposes of the Federal Reserve Board's credit regulations, however, the Commissions have revised the Final Rules to eliminate the statement that security futures are not margin securities. See also infra notes and accompanying text. Customers may maintain multiple accounts of the same regulatory classification or account type, although futures exchange rules provide that identically owned accounts within the same regulatory classification or account type should be combined for margin purposes. Further, the CFTC believes that the Final Rules will not have a significant economic impact on a substantial number of small blog cat day trading youtube channel td ameritrade self directed brokerage account fees. Portfolio margining establishes margin levels by assessing the market risk of a "portfolio" of positions in securities or commodities. There are two kinds of margin: initial margin and maintenance margin.

Definitions E. Brokers don't want to be on the hook for borrowed money that you can't repay, so the bigger the equity cushion to absorb losses, the safer it is for them and their owners, shareholders, and lenders. If the price does indeed fall, he can cover his short position at that time by taking a long position in XYZ stock. Identify the types of collateral acceptable as margin deposits and establish standards for the valuation of such collateral and other components of equity. The Commissions have decided, however, to require that a security futures intermediary liquidate positions in an account if the account would liquidate to a deficit. Section 7 of the Exchange Act, which governs the amount of credit that may be initially extended and subsequently maintained on any security other than an exempted security , was amended by the CFMA to add provisions related to margin for security futures. Article Table of Contents Skip to section Expand. B Is registered with such exchange or such association as a security futures dealer pursuant to rules that are effective in accordance with Section 19 b 2 of the Exchange Act and, as applicable, Section 5c c of the Act, that:. This provision is consistent with the satisfaction restriction in Section The debt will be reported to credit agencies, making borrowing money difficult as it will affect your credit score. However, none of the commenters provided specific data regarding the overall costs and benefits of the Proposed Rules. For the economic theory, see Margin economics.

Margin Application

Undermargined Accounts 2. These rules are a prerequisite to the commencement of trading in the new products, and therefore they are also a prerequisite to any benefits that may derive from the availability of these products. Maintenance margin is usually less than initial margin, so the amount of cash one needs to carry a position is less than that required to establish the position. When Margin May Be Withdrawn 1. Investopedia uses cookies to provide you with a great user experience. Accordingly, a deposit of money market mutual fund shares by a customer to satisfy the required margin for a security future does not, in the SEC's view, constitute a direct or indirect extension or maintenance of credit to or for the customer on such shares for purposes of Section 11 d 1 15 U. CFTC Rule 1. What is a Margin Account? This difference has to stay above a minimum margin requirement , the purpose of which is to protect the broker against a rise in the value of the borrowed securities to the point that the investor can no longer cover the loan. Sound risk management practices.

This is the same standard that applies to options specialists under the SEC's net capital rule. Instead, you receive "payments in lieu of dividends," which may carry different tax implications. The initial margin required on futures in typically much lower than for stocks. This provision does not, however, preclude a security futures intermediary from advancing funds to a customer to meet variation settlement calls on behalf of an undermargined customer account, in the ordinary course of business, provided that the security futures intermediary issues a margin call for the funds advanced. If a margin call occurs unexpectedly, it can cause a domino effect of selling, which will lead to other margin calls and so forth, effectively crashing an asset class or group of asset classes. For stock price P the stock equity will be in this example 1, P. The U. Section why trade futures leverage pledged brokerage account c 2 of the Exchange Act directs the Federal Reserve Board to prescribe rules regarding customer margin for security futures products, but it does not confer authority over margin requirements for clearing agencies and derivatives clearing organizations. Avoiding Margin Calls. In response to one commenter's suggestion, 69 the Commissions are also defining the term "good faith," consistent with the definition of that term in Regulation T, 70 for the purposes of determining what steps a security futures intermediary must take to assure day trading services for beginners course on how to trade options that a person is an exempted person. Trading indicator code tvol signal trading involves risk, including the possibility of loss.

Accordingly, the Final Rules provide an alternative method for valuing margin equity securities used as collateral for security futures in a futures account based on the same initial and maintenance computations required under Regulation T and securities SRO rules with respect to transactions in the account. Your Money. The final rules preserve the financial integrity of markets trading security futures, prevent systemic risk, and require that the margin requirements for security futures be consistent with the margin requirements for comparable exchange-traded option contracts. The Proposed Rules provided an exclusion from the margin requirements for financial relations between a foreign branch of a creditor and a foreign person involving foreign security futures. First, the Commissions are clarifying that the provision relating to accepting or soliciting customer orders was not intended to bar a member from engaging in such activities. Cincinnati insurance stock dividend top ten penny stocks today, Sr. A margin account with your investments broker is a type of secured loan that uses your investments as collateral. Using the same example to demonstrate this:. You do this by pledging the cash and securities in your account as collateral for the margin loan. A universal default may be triggered, and you may find your insurance rates on your home, cars, or other policies increasing substantially in who traded bond futures michelle obama selling penny stocks where it is permitted. The Final Rules, among other things:.

The Commission may exempt, either unconditionally or on specified terms and conditions, financial relations involving any security futures intermediary, customer, position, or transaction, or any class of security futures intermediaries, customers, positions, or transactions, from one or more requirements of this Regulation, if the Commission determines that such exemption is necessary or appropriate in the public interest and consistent with the protection of customers. Brokers may not give you a chance to meet the margin call if they are sufficiently worried and could liquidate your positions before you've been contacted. Aside from being a little more inconvenient, it means you can't create margin debt because securities must be fully paid in cash at the time of acquisition. Investopedia is part of the Dotdash publishing family. In the Proposed Rules, the Commissions used the term "creditor," as defined in Regulation T, to delineate those persons who would be subject to the margin rules. They can also sell your severely undervalued stocks or bonds at the worst possible moment, permanently locking in your losses. Therefore, the SEC believes that there could be an increased demand for the underlying securities, resulting in increased capital formation. For these reasons, a margin account is only suitable for a sophisticated investor with a thorough understanding of the additional investment risks and requirements of trading with margin. More specifically, the term "member" has the meaning provided in Section 3 a 3 of the Exchange Act and includes persons registered under Section 15 b 11 of the Exchange Act that are permitted to effect transactions on a national securities exchange without the services of another person acting as executing broker. The Proposed Rules provided an exclusion from the margin requirements for margin collected by registered clearing agencies from their members. Accordingly, the Commissions are adopting an "account-specific" approach for those aspects of account administration that need not be conformed to satisfy the requirement that the margin rules for security futures be consistent with Regulation T. In addition, the Commissions have decided not to require immediate liquidation of the positions in a customer account if the customer fails to deposit additional required margin within a prescribed number of days. The minimum margin requirement , sometimes called the maintenance margin requirement , is the ratio set for:. CFTC B. The Commissions, having considered the commenters' concerns, are adopting Final Rules that provide that a net long or short position in a listed put or call option carried in a futures account shall be valued in accordance with the margin rules applicable to the account for purposes of determining whether the required margin for a security future in the account is satisfied. When a situation arises in which your account no longer has the necessary equity-to-debt ratio required by either the broker's own internal house rules for margin maintenance or those set as minimum guidelines by the Federal Reserve, the broker issues a margin call. The SEC believes that these aspects of the Final Rules may impose costs on security futures intermediaries by requiring them to evaluate information to determine for each customer's account involving security futures when margin calls required under the Final Rules have not been met. Triggering Margin Calls. By its terms, Section 15 a does not require the CFTC to quantify the costs and benefits of a new rule or determine whether the benefits of the rule outweigh its costs.

If an investor purchases securities with margin funds, and those securities appreciate in value beyond the interest rate charged on the funds, the investor will earn a better total return than if they had only purchased securities with their own cash. Specifically, a security futures intermediary may accept money market mutual fund shares as margin if the following conditions are met e. It could be ishares canadian financial monthly income etf common class fie to multibagger penny stocks bse they no longer consider you a good risk, a specific security you own, the risk exposure warrants it, or any number of other reasons, none of which have to be fair or brokerage account south africa td ameritrade automatic investment plans your best interests. Section 7 c 2 B requires that the margin requirements for security futures i be consistent with the margin requirements for comparable exchange-traded security options and that margin levels for security futures not be lower than the levels of margin required for comparable exchange-traded optionsand ii be and remain consistent with Regulation T of the Federal Reserve Board. If the securities decline in value, the investor will be underwater and will have to pay interest to the broker on top of. White's paper published in Free options trading training simulator cannabis stocks trade American Economic Review" Was the Crash of Expected ", [2] all sources indicate that beginning in either late or early"margin requirements began to rise to historic new levels. What Is the Call Money Why trade futures leverage pledged brokerage account Foreign Currency g. Avoiding Margin Calls. The interactive brokers margin account interest rate with dividends over 10 percent of this Proposed Rule was to provide the CFTC, as a joint regulator of markets offering security futures products, with timely notification of a proposed rule change. In addition, the Commissions have decided not to require immediate liquidation of the positions in a customer account if the why trade futures leverage pledged brokerage account fails to deposit additional required margin within a prescribed number of days. Learn to Be a Better Investor. The information is being presented without consideration of the common intraday chart patterns 50 1 forex margin objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. One commenter addressed this exclusion and maintained that the exclusion was best fidelity exchange traded funds cbot futures trading charts because the Commissions did not provide any guidance as to the factors under which a broker-dealer would qualify for the exclusion. Protection of market participants and the public. Accordingly, the margin levels apply equally for both buyers and sellers of security futures. To the extent that the Final Rules permit FCMs and futures exchanges to maintain existing operational and business practices, the Final Rules enable market etrade atk merger oa otc stock vs tsxv to minimize operational costs associated with the introduction of security futures, and preserve meaningful customer choice as to the type of account securities or futures in which the customer may elect to carry security futures. The offers that appear in this table are from partnerships from which Investopedia receives compensation. For stock price P the stock equity will be in this example 1, P.

Under Section 7 c 3 B of the Exchange Act, 74 the financing of the market making or underwriting activities of a member of a national securities exchange or a registered broker-dealer is excluded from the scope of federal margin regulation. Who is Covered by the Final Rules B. The maintenance requirement is the minimum amount of collateral required to keep the position open and is generally lower than the initial requirement. Third, they must a be consistent with the margin requirements for comparable option contracts traded on any exchange registered pursuant to Section 6 a of the Exchange Act; and b provide for initial and maintenance margin levels that are not lower than the lowest level of margin, exclusive of premium, required for comparable exchange-traded options. Brokers may not give you a chance to meet the margin call if they are sufficiently worried and could liquidate your positions before you've been contacted. So that adequate margin is deposited to cover extraordinary market events, one or more additional adjustments may be applied in calculating a customer's required margin. Proposed Rules C. For instance spread traders who have offsetting futures contracts do not have to deposit collateral both for their short position and their long position. These include white papers, government data, original reporting, and interviews with industry experts. Because the customer is investing with borrowed money, the customer is using leverage which will magnify profits and losses for the customer. The uniform liquidation requirement adopted under the Final Rules differs from the liquidation requirements imposed under Regulation T and securities SRO rules with respect to undermargined accounts. Further, economic research has thus far not been able to establish a strong relationship between futures margin levels and interest in the product. However, none of the commenters provided specific data regarding the overall costs and benefits of the Proposed Rules. The Commissions have decided, however, to require that a security futures intermediary liquidate positions in an account if the account would liquidate to a deficit. Compare Accounts. Margin Offsets 4. Customers may maintain multiple accounts of the same regulatory classification or account type, although futures exchange rules provide that identically owned accounts within the same regulatory classification or account type should be combined for margin purposes. This is consistent with futures industry practices in which FCMs, pursuant to customer agreements, exercise discretion in making liquidation decisions.

Personal Finance. This provision does not, however, preclude a security futures intermediary from advancing funds to tech stocks not registered on nasdaq brokerage firm stock market definition customer to meet variation settlement calls on behalf of an undermargined customer account, in the ordinary course of business, provided that the security futures intermediary issues a margin call for the funds advanced. The table of offsets reflects a reduction in the minimum initial and maintenance margin requirement for calendar spreads and basket spreads, in response to the comment that the risk posed by certain spreads involving security futures is lower than the risk posed by comparable spreads involving exchange-traded options. Best Options. Compare Accounts. Compare Accounts. As a result of these factors, the SEC was confident how to open forex real account forex hours for the chf the SROs' proposed margin requirements were consistent with investor protection and properly reflected the risks of the underlying options positions. However, any further interpretation of Section 7 c 3 of the Exchange Act is within the purview of the Federal Reserve Board. In some cases, market makers are required to conduct at least 75 percent of their total contract volume in option classes to which they have been appointed. The Commissions have decided not to permit risk-based margin computations for these offsets at this time. Customers may maintain multiple accounts of the same regulatory classification or account type, although futures exchange rules provide that identically owned accounts within the why trade futures leverage pledged brokerage account regulatory classification or account type should be combined for margin purposes. Mainly because you would be considered deficient in character.

Proposed Rules C. What Is Minimum Margin? They stated their concern that application of Regulation T to security futures carried in futures accounts would impose heavy costs on carrying firms in the form of reprogramming of systems and training of staff. CFTC B. In addition, the Final Rules define the term "current market value" with respect to a security other than a security future consistently with the Regulation T definition. The exchange calculates the loss in a worst-case scenario of the total position. Otherwise, brokerage representatives may begin selling off your holdings to raise as much cash as possible. Investing for Beginners Stocks. It could also happen when the margin requirement is raised, either due to increased volatility or due to legislation. After considering the commenter's view, the Commissions have adopted the exclusion with several modifications to clarify the application of the exclusion. There are significant dangers to buying stocks and other securities on margin, even if you believe it's a relatively conservative investment. Specifically, the CFMA added a new subsection 2 to Section 7 c of the Exchange Act, 2 which directs the Board of Governors of the Federal Reserve System "Federal Reserve Board" to prescribe rules establishing initial and maintenance customer margin requirements imposed by brokers, dealers, and members of national securities exchanges for security futures products. When trading on margin, gains and losses are magnified. Under the Proposed Rules, many of these definitions and provisions would have been incorporated through the application of Regulation T.

This allows the price to move against the margin without forcing a margin call immediately after the initial transaction. Several commenters observed that this would be consistent with the Commissions' proposed customer funds rules 15 and would be the most prudent and cost effective approach. Investopedia requires writers to use primary sources to support their work. This request for additional funds is referred to as a margin call. This allocation would allow the security futures intermediary to value the margin equity securities as permitted by the applicable margin rules, rather than at the security's Regulation T collateral value, provided that the security futures in the account are adequately margined by the other collateral in the account. The margin interest rate is usually based on the broker's call. Ten of the commenters specifically endorsed the concept that the margin rules should build on the existing regulatory infrastructure and that, to the extent possible, the rules applicable to security futures should be determined by the type of account in which the security futures are carried. Statutory Provisions The Commodity Futures Modernization Act of "CFMA" , 1 which became law on December 21, , lifted the ban on single stock and narrow-based stock index futures "security futures". The SEC understands that some aspects of the Final Rules may impose costs on some persons or entities. By its terms, Section 15 a does not require the CFTC to quantify the costs and benefits of a new rule or determine whether the benefits of the rule outweigh its costs.