What is a limited account?
A limited account is the type of margin account that currently does not have enough capital or resources to allow further purchase of investment on margin. This means that until the investor settles at least part of the current account balance on the margin, he will not be able to use this source as a means to obtain additional shares of shares, bonds or other assets that are commonly traded using an account. In many countries, national business regulations help set standards for what is considered to be a limited account, which facilitates the mediation to manage these accounts uniformly.
In order to understand how a limited account occurs, it is first necessary to define what is meant by the edge of the edge. Essentially, this account type allows investors to make purchases using a credit line that is introduced and managed by mediation. Brokers have set a credit limit for an account on the edge on the basis of a credit struggle The Investor, often reflects such factors such as the value of the assets and the general credit rating of this investor. The investor usually calls on the edge account to buy investments, and then borrowed the amount borrowed by means of revenues generated by this investment.
If the margin's account balance reaches a level that is considered somewhat risky by the mediation, the limits for the future use of the loan are set until the investor retires another amount of that balance. One of the common ways to happen is the value of the investment purchased by the account will fall below the current balance that the investor still owes on the margin, which caused brokery to limit the use of the account to time. This allows you to ensure that the limited account regains sufficient capital to meet any initial margin requirements that are introduced by a broker. Together with the protection of brokerage interests, this warranty also protects the investor as limiting the use of the account prevents the investor from taking a larger debt than it canExpect to expect to honor.
In many countries, brokers have set standards for limited accounts simply by using the requirements that are introduced by government regulatory agencies. Brokers can sometimes implement requirements that exceed the requirements of the agencies. Brokers usually provide investors with details of what type of activity will launch an account on the edge to obtain a limited account status and what to be done to limit it.