If your account does not meet margin requirements, several consequences may occur:
- Restrictions on Opening New Positions:
- You cannot open new positions that increase initial margin if your Equity with Loan Value (ELV) is less than the Initial Margin Requirement.
- Your account needs to have sufficient Available Funds (ELV minus total Initial Margin) to meet the change in the account's Initial margin requirements for a margin increasing order
- Risk of Liquidation:
- Your account is subject to liquidation if your ELV falls below the Maintenance Margin Requirement.
- Regulation T (Reg-T) accounts also need to ensure that Special Memorandum Account (SMA) is not negative starting at at 15:50 EST which may lead to Reg T liquidation
- Margin Call:
- The broker may initiate a margin call, which involves selling a portion of your holdings to cover the margin requirement.
- IBKR will sell enough of your position to meet the margin deficit and leave some positive Excess Liquidity (Note: the amount after Liquidating depends on the size of the account so leave the wording like that)
To avoid these consequences:
- Regularly monitor your account balance and margin requirements.
- Maintain adequate funds in your account to meet margin requirements at all times.
- Be prepared to deposit additional funds or securities if needed to meet margin calls.