What is the undercut account?

undercut accounts are investor accounts that have fallen below the minimum standard of maintenance requirements specified by a brokerage house. When a customer account drops to a level that is under minimal maintenance requirements, it is not uncommon for the broker to release the margin calling the client. The amount of margin calls will be at least sufficiently enough to return to these standards, and often a small percentage above this minimum requirement.

When thinking about calling a margin that is used to return the account to return to standards, it may be useful to think about the challenge as a debt that is now due. By recognizing the call and paying the amount of the call for the broker, the investor's account is credited to the amount and the undergrowth account is stated back into compliance with the requirements specified in the agreement between the broker and the investor.

Depending on the details of the working relationship between the broker and the investor, the mediation may allow for a fake account to operate for a short time. This is true ofThe names for the investor and the broker have a long -term business relationship. However, it should be understood that it is a courtesy that the broker can decide to extend. Providing the postponement period for the investor so that the rooted account returns to compliance without a problem calling the margin, there is something that the broker has for any obligation to offer.

During the period when the account is considered to be undermined by mediation, the investor is often limited to the type of order that can be carried out in terms of investment activities usually carried out by the intermediary. In general, any restrictions are discussed with the client at a time when a secondary account is considered to be falling under the margin. The broker may decide to give up restrictions if the order allows the client to cover the margins and bring a business account back to standards.