TradeEagle is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided.
Should you have any questions or concerns please contact Customer Services at 315-662-2048.
When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from the brokerage firm. If you choose to borrow funds from the firm, you will open a margin account with the firm. The securities purchased are the firm's collateral for loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and as a result, the firm can take action, such as issue a margin call and/or sell securities in your account, in order to maintain the required equity in the account.
It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:
You Can Lose More Funds Than You Deposit in the Margin Account
A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm for the loan that was made to you to avoid the forced sale of those securities or other securities in your account.
The Firm Can Force the Sale of Securities in Your Account(s)
If the equity in your account falls below the maintenance margin requirements the firm can sell the securities in your account to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.
The Firm Can Sell Your Securities Without Contacting You
Some investors mistakenly believe that the firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. This is not the case. The firm will attempt to notify all customers of margin calls, but the firm is not required to do so. However, even if the firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interest, including immediately selling the securities without notice to the customer.
You Are Not Entitled to Choose Which Security in Your Margin Account is Liquidated or Sold to Meet a Margin Call
The securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.
The Firm Can Increase its "House" Maintenance Margin Requirements at Any Time Without Providing Advance Written Notice
These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the firm to liquidate or sell securities in your account.
You Are Not Entitled to an Extension of Time on a Margin Call
While an extension of time to meet margin requirements may be available to customers under certain conditions. A customer does not have a right to the extension.