What is a Concentrated Maintenance (CM) Call?

Concentrated Maintenance Calls

Concentrated Maintenance calls are issued when you are using more than $500k in borrowed funds and you are concentrated in a single stock. Being "concentrated" means you hold at least 70% of your portfolio in that one security.  When this happens, the maintenance requirement for the security you're concentrated in increases to 40%, though in some circumstances it may be higher.

While your account has a CM call, we’ll prevent you from buying stock to avoid increasing the amount of the call.

You'll need to deposit money or sell stock to return your account to good standing.  If you’re unable to deposit or sell stocks by the date your call is due, we may liquidate your positions to cover the call.

Here are some tips for meeting your CM call:

Selling Marginable Stocks: Marginable stocks have a maintenance requirement of less than 100%, meaning that you won’t get the full dollar value of your sales applied to your CM call.  Since these stocks have a maintenance requirement of 40%, you’ll need to sell at least 2.5x the amount of your CM call to meet it.  Example: If your call amount is $100, you need to sell $250 of marginable stocks.

$250 * (0.40) = $100

Selling Non-Marginable Stocks: Non-marginable stocks have a 100% maintenance requirement. You can sell 1x the call amount because these stocks get 100% release from sales.  Example: If your call amount is $100, you have to sell at least $100 to meet the call.

$100 * (1.00) = $100

We’ve illustrated a full example below:

Customer X ends the day with a borrowed amount greater than $500,000, and 87% of her portfolio value is held in TSLA.

Her total Maintenance Requirement for all of the equities held in her account is $1,333,438.  Her total Margin Equity at the end of the day is $1,173,676.

$1,333,438 (her maintenance requirement) - $1,173,676 (her margin equity) = $159,762 short of the Maintenance Requirement.

Because more than 70% of her portfolio is made up of Tesla and she is borrowing more than $500,000, she is required to reduce the concentrated TSLA position to meet the Concentrated Maintenance call.  A Concentrated Maintenance call will be generated for $159,762 - the amount she's under the maintenance requirement.

The Maintenance Requirement for a concentrated position is 40%.  This means that for every $1.00 of TSLA sold, $0.40 will go toward meeting the maintenance call.  So, to meet the call amount of $159,762, Customer X will need to sell $159,762 / 0.40 = $399,405 of TSLA.

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