Reference

Glossary of margin and leverage trading terms.

The vocabulary that turns up in broker risk-disclosure documents, FINRA Rule 4210 reference materials, and the GARP FRM curriculum. Each entry is short and links to longer treatment where one exists.

Borrow fee: The annualised rate paid to the lender of borrowed shares in a short position. Range 0.25–100 %+ depending on supply/demand. See the short selling page.
Buy-in: Forced closure of a short position when the lender recalls the borrowed shares and the broker cannot find a replacement lender. Closes at prevailing market price.
Buying power: The maximum dollar amount of new positions a customer can open, given account equity and margin requirements. Equals equity / initial margin percentage for Reg T accounts.
CFA: Chartered Financial Analyst. The professional designation administered by the CFA Institute.
Delta-neutral: An options-portfolio structure where the net first-derivative exposure to the underlying price is zero. Common in spread strategies; PM-eligible portfolios often run delta-neutral or near-neutral.
Effective leverage: Position value divided by account equity. The multiple of equity that would be exposed to a price move. 2× for a Reg T 50 % initial-margin position.
FINRA Rule 4210: The FINRA rule governing maintenance margin for securities accounts. Establishes 25 % maintenance for long stock, 30 % for short stock $5+. See the Reg T & FINRA page.
Force liquidation: Broker-initiated closure of customer positions to bring an account back above maintenance margin when a margin call is not met. May occur without prior customer notice.
FRM: Financial Risk Manager. The professional certification administered by GARP (Global Association of Risk Professionals).
HTB: Hard To Borrow. A flag indicating that shares of a stock are difficult to obtain for short selling, typically resulting in elevated borrow fees and increased buy-in risk.
House requirement: The maintenance margin requirement set by an individual broker, which may exceed the FINRA floor of 25 %. Typically 30–40 % for retail accounts.
Initial margin: The percentage of position value the customer must deposit when opening the position. 50 % under Reg T for US-listed equity.
Kelly criterion: The optimal-betting fraction formula derived by J.L. Kelly (1956). Adapted for continuous-time investment, sets optimal leverage at (μ − r_f) / σ². See the leverage page.
Locate: The pre-trade verification by a broker that shares are available to borrow before allowing a short sale. Required by SEC Reg SHO.
Maintenance margin: The minimum equity ratio (equity / current value) below which the broker issues a margin call. 25 % under FINRA Rule 4210; commonly 30–40 % under broker house policy.
Margin call: Broker demand for additional cash, deposit of securities, or position reduction when account equity falls below maintenance. See the margin call page.
Margin loan: The amount borrowed from the broker to purchase securities on margin. Accrues interest daily at a broker-set APR.
PDT: Pattern Day Trader. A FINRA designation for accounts executing 4+ day trades within 5 business days where day trading is more than 6 % of activity. Subject to $25,000 minimum equity. See the Reg T & FINRA page.
Portfolio margin (PM): A risk-based margin methodology that recognises offsetting positions, producing materially lower margin requirements for hedged portfolios. Eligibility typically requires $100K+ equity and options approval. See the portfolio margin page.
Recall: A demand by a stock lender to return the borrowed shares. If the broker cannot find a replacement lender, the short is force-closed via buy-in.
Reg T: Federal Reserve Regulation T. Sets the 50 % initial-margin requirement for US-listed equity. In place since 1974, unchanged.
Reg SHO: SEC Regulation SHO. Governs short selling in US securities, including the locate requirement, threshold-list close-out provisions, and the alternative uptick rule.
Short interest: The total number of shares currently held short. Reported semi-monthly to FINRA. Short interest as a percentage of float is a key squeeze-vulnerability indicator.
Short squeeze: A rapid price increase driven by short-position margin calls forcing covering, which produces further price increase, which triggers further calls. See the short selling page.
SMA: Special Memorandum Account. A notional ledger tracking accumulated buying-power capacity in a Reg T account. Increases on long-market-value gains; sticky on the upside.
SPAN: Standard Portfolio Analysis of Risk. The CME Group’s risk-based margin methodology for futures, used by clearing members worldwide since 1988.
Stress scenario: A defined adverse market move (e.g., ±15 % for equity) used in risk-based margin computation to determine portfolio-level margin requirements.
Volatility (annualised): The standard deviation of log returns expressed on an annualised basis. The denominator in the Kelly leverage formula and the key input to volatility-adjusted position sizing.