Margin account: When a customer establishes a Margin Account with a brokerage firm, they are establishing a secured credit relationship. The broker will open a credit account with a formal margin agreement that defines the terms for the loan. The customer puts up part of the cash that is needed for purchases and the broker lends the rest of the required funds by using securities that are already in the customer's account as collateral for the loan.

Collateral
Margin account in our glossary: terms and definitions

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