In addition to maintenance margin calls, if your account violates any of these trading rules, your account will be issued one of the following call types.
The following call types are uncommon and typically do not occur on M1 accounts. If you suspect that one of the call types below have been issued to your account, please contact M1 support for further assistance.
Regulation T call
A Regulation T call is issued following the purchase of securities in a margin account where at least 50% of the purchase amount has not been made with cash. A Reg T call typically occurs when a symbol with a 100% maintenance requirement is purchased with borrowed funds and not equity in the account.
Example: A buy order is submitted for $2,000 in a 100% maintenance requirement security. If only borrowed funds are used to complete the purchase, a Reg T call will be issued to the account for $1,000, or 50% of the call.
A Reg T call must be covered by a deposit of cash equal to the amount of the call, or a liquidation of stocks double the amount of the call by the trade date plus 4 business days (T+4).
Calls that aren’t met by T+4 are subject to liquidation, account restrictions, and/or closure.
Day trade call
A day trade call is issued to accounts when the day trading buying power in the account is exceeded.
Day trading buying power is exceeded when the amount purchased and sold of security in a day is greater than four times the maintenance margin excess as of the previous day’s closing of business.
If exceeded and a day trade is made (buy and sell the same tax lot in the same day), a day trade call is issued. The amount of the call is 25% of the amount exceeded.
Day trade calls must be met by a deposit of cash equal to the amount of the call by T+4. Deposits must remain in the account for 48 hours to cover the call.
Calls unmet by T+4 are subject to liquidation, account restrictions, and/or closure. If the call is not met, further trading is allowed on a cash only basis for 90 days.
Example: The day trade buying power in an account is $10,000. On a single day, the account buys $20,000 in the morning trade window, and sells the same shares for $20,000 in the afternoon trade window. As the day trade buying power in the account was $10,000 for the day, the day trade of $20,000 exceeded the limit by $10,000. As such, the account is issued a Day Trade call for 25% of the amount exceeded of $10,000, for a total of $2,500.
Short in one call
A short in one (S1) call is issued to an account following a long sale versus pending good delivery. The call amount is the share amount of the short shares.
Short in one calls are alerts that occur when an account executes a long sale versus pending good delivery in Type 1. The alert amount is the share amount of the short shares.
Accounts that have executed a long sale, pending good delivery of shares, are issued an S1 alert. An extension can be filed on the 10th business day after the settlement. Under SEC Rule 15c3-3, if the securities are not received in good delivery by the 10th business day after the settlement and no extension is filed, the securities will be bought.
If the securities are not received in good delivery by the 10th business day after the settlement, the securities will be bought to cover.
*Please note* Short positions are not supported on the M1 platform, and are usually caused as a result of selling securities in the process of an outgoing ACAT transfer or the result of an errant sell from your account due to a stock split.
Short positions are rare on the M1 platform, however, if one is held on your account, please contact M1 support for further assistance.
Money due call
A money due call is issued to a cash account if the account exceeds the cash account buying power and has insufficient funds to complete the purchase of securities.
Money due calls are usually caused by returned deposits.
Money due calls must be covered by a deposit of cash or liquidation of positions by T+4. Calls unmet by T+4 are subject to liquidation, account restrictions, and/or closure.
Example: A deposit of $1,000 is made to an individual account via deposit from an external bank on Monday morning. Securities are purchased that morning in the trade window. Two days later on Wednesday, the deposit is returned due to insufficient funds at the external bank. The account is then issued a Money Due call for the amount of the deposit, and the securities that were purchased with the returned deposit will be sold to cover the call in the next available trade window.
All investing involves risk, including the risk of losing the money you invest. Borrowing on margin can add to these risks, and you should learn more before borrowing. M1 Borrow available on margin accounts with at least $2,000 invested. Not available for all account types including retirement, custodial and some trust accounts. Margin rates subject to change.