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Short-Selling Collateral

When a client engages in short selling, i.e. selling securities after a short sale from a brokerage firm, the client's account will be credited with cash equal to the transaction amount. To ensure that the client can repay, the client's account is required to set aside an amount of cash equal to the market value of the margin call to ensure that the client has sufficient cash to close out the short position.

The short-selling collateral is not included in the cash buying power. If a deficiency arises after cash is deducted from the short-selling guarantee, it will be treated as a financing deficiency to calculate interest.

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