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Increase your purchasing power on your Zions Direct account by adding margin, a loan against the cash and eligible securities in your Zions Direct account. How you use the funds is up to you. For example, you could use your margin loan to purchase additional securities, sell stock short, or as a short-term financing alternative to borrowing from traditional lending sources. In many cases, there is less paperwork to establish a margin account than applying for a loan and the interest rate may even be lower.
What is a margin account?
A margin account allows you to borrow against the cash and equity in your account to purchase additional securities, sell stock short, or withdraw cash as a loan. Margin loans are charged interest for the amount that is borrowed.
Example: You currently have $50,000 in cash and you wish to use your margin account purchase stock. Given a 50% equity requirement, you could use your $50,000 cash to purchase up to $100,000 worth of stock.
Regulations dictate the amount of cash or equity that must be deposited and maintained as collateral against your margin loan. You can add margin to your existing Zions Direct account or request margin when applying for a new account. Margin is available on all brokerage accounts with the exception of IRAs and Custodial accounts. To request margin, simply read the Margin Disclosure, complete a Margin Agreement, and return to Zions Direct.
If you have any questions, please contact Zions Direct 800-524-8875.
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Why use a margin account?
Margin can provide you with the flexibility to purchase additional shares of stock or take out a cash loan from your account. Once margin agreement is on file, you essentially are pre-approved to use your "credit-line" when you choose.
Example: You have found the perfect building lot to build your retirement home on and are now considering borrowing $20,000 to finance the transaction. First, you consider a traditional loan with a fixed repayment schedule. The loan requires an application and carries with it origination fees. Next, you consider - borrowing the funds through a margin loan on the $40,000 in stock in your Zions Direct margin account. The margin loan requires a phone call to Zions Direct to request a check for $20,000 and no additional applications.
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What are margin rates?
The margin rate is the rate for the margin loan. The rate varies from a minimum of 0.25% to a maximum of 2.25% above the Wall Street Journal Broker Call Rate (BCR), depending on the amount of the margin loan.
| Margin Interest Rates Effective February 8, 2008 |
| Average Margin Balance |
Margin Rate |
Effective Rate |
| $0 - $49,999 |
BCR + 2.25% |
6.25% |
| $50,000 - $99,999 |
BCR + 1.75% |
5.75% |
| $100,000 - $249,999 |
BCR + 1.25% |
5.25% |
| $250,000 - Up |
BCR + 0.25% |
4.25% |
BCR = 4.00%
Questions regarding margin, margin interest, or calculation procedures, please call Zions Direct at 1-800-524-8875.
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What are the rules for buying on margin?
The market crash of 1929 resulted in the passage of The Federal Reserve Board Regulation T, which governs the extension of credit in the form of margin loans and stipulates the minimum initial margin and the maintenance margin requirements. Initial margin is the minimum equity that must be pledged in order to secure a margin loan. Maintenance margin is the absolute minimum equity that must be maintained to continue to secure your margin loan. A margin call is triggered if a margin account falls below the maintenance amount.
To view margin requirements, please click here.
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What is a margin call?
A margin call is a demand to bring a margin account up to the minimum maintenance margin. Margin calls require immediate action. The immediate sale of securities, the deposit of funds, or the deposit of securities is required to bring a margin account back to within the maintenance margin. If a margin call is not met, part or all of the account securities may be sold to meet the call.
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Which securities can be margined?
The following securities can be margined:
- Listed common and preferred stocks
- Over-the-counter securities (NASDAQ National Market System)
- Municipal Bonds
- Corporate Bonds including Convertible Bonds
- Treasury and Agency Bonds, Notes, STRIPs, Bills
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Short selling securities and margin?
Short selling securities requires margin because the securities being sold are borrowed for the transaction. An investor who short sells a stock expects the price of the stock to decline at which time the shares can be purchased at a lower price, resulting in a profit. However, if the price of the stock rises, the investor may be forced to repurchase the shares at a higher price, resulting in a loss.
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What are the risks of buying on margin?
Borrowing on margin to purchase securities can magnify gains and losses. Careful consideration should be given to the potential risk of borrowing against securities. Margin calls require immediate attention and may require additional deposit of funds or securities.
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How to establish a margin account?
To establish margin on an existing account, please read the Margin Disclosure and complete a Margin Agreement. Margin accounts can be requested for all accounts with the exception of IRAs and Custodial accounts. Please call Zions Direct 1-800-524-8875 if you have any questions.
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