Series 24: Short Selling Rules

Taken from our Series 24 Online Guide

Short Selling Rules

Like purchases on margin, short sales are protected in a margin account. For purchases, the initial margin requirement is 50% of the current market value of the security, and the customer is extended credit for the balance of the purchase. For short sales, the initial margin is also 50%, but the borrower, rather than being credited for the balance, must fully collateralize the borrowed securities. The initial margin requirement, then, is 150% of the short market value (SMV) of the security.

The relevant equation is:

Credit Balance – SM

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Since you're reading about Series 24: Short Selling Rules, you might also be interested in:

Series 65 - Investment Company Communications

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