Margin investing lets you borrow money through your Aries account to buy securities, using the assets in your account as collateral. Margin loans are extended by Apex Clearing Corporation, which provides clearing and custody services for Aries accounts.
How Margin Works
With a margin account, you can borrow funds to purchase more securities than you could with cash alone. Your existing securities and cash serve as collateral for the loan.
For example, if you have $5,000 in your account, you might have up to $10,000 in buying power, allowing you to purchase more shares. However, you are responsible for repaying the full borrowed amount plus interest, regardless of whether your investments increase or decrease in value.
Margin Requirements
Initial margin is the minimum equity you must deposit to open a margin position, generally 50% of the purchase price under Federal Reserve Regulation T.
Maintenance margin is the minimum equity you must maintain after purchasing securities on margin, typically 25% or higher depending on the security. Ram Financial and Apex Clearing may impose higher requirements at their discretion and can change them without prior notice.
Interest on Margin
Apex Clearing charges interest daily on your outstanding margin balance. Over time, these costs can significantly reduce your returns or add to your losses. See our Margin Interest Rates page for current rates.
Risks of Margin Investing
Margin amplifies both gains and losses. You can lose more money than you deposit in your margin account. Key risks include:
- Margin calls: If your equity falls below the maintenance requirement, you may need to deposit additional funds or securities on short notice.
- Forced liquidation: Ram Financial and Apex Clearing can sell your securities without contacting you and without your input on which securities are sold.
- Interest costs: Margin interest accrues daily and can result in net losses even if your securities hold their value.
Before opening a margin account, review our Margin Disclosure and the Apex Margin & Short Account Agreement in the Legal & Disclosures section.
If you have questions about margin, contact us at support@aries.com.