House Call
Written by: Editorial Team
House Call is a term used in the financial industry to describe a request by a broker-dealer or other financial institution for a customer to deposit additional funds or securities into their account to meet margin requirements. In the context of margin trading, when an investor
House Call is a term used in the financial industry to describe a request by a broker-dealer or other financial institution for a customer to deposit additional funds or securities into their account to meet margin requirements.
In the context of margin trading, when an investor borrows money from a broker to purchase securities, the broker requires the investor to maintain a minimum amount of equity in the account, known as the margin requirement. If the value of the securities in the account declines below a certain level, the broker may issue a house call, requesting the investor to deposit additional funds or securities to meet the margin requirement.
The purpose of the house call is to protect the broker from the risk of losses if the investor defaults on the loan. The investor has a specified time frame, typically one or two days, to comply with the house call. If the investor fails to meet the call, the broker has the right to sell the securities in the account to recover the loaned funds.
House calls are usually made by broker-dealers or other financial institutions when market volatility or other factors increase the risk of default. Investors should carefully monitor their accounts to avoid being caught off guard by a house call and potentially losing their investments.