If you use a margin account, in addition to the maintenance margin call (the one you already know from the article "What is a margin call?"), there is another type of call that works differently: the Reg T margin call. To understand it, you first need to know about SMA.
What is SMA?
SMA (Special Memorandum Account) is the record of how much margin line you've already "earned" but haven't used yet. It's the basis on which your total Margin and used Margin — shown in your Buying Power — are calculated at the regulatory level.
It increases when your equity rises, whether from market gains or new deposits.
It decreases only when you use it: by buying more assets or withdrawing cash.
It does not decrease due to a drop in the market value of your positions. Once you "earn" SMA, it stays recorded and only goes down when you buy or withdraw.
That's why SMA is calculated as the greater of:
your prior SMA (adjusted for your own buys, sells, deposits and withdrawals), or
(Portfolio value − Reg T requirement).
Where: Portfolio value = Market value of your positions − Margin used; Reg T requirement = 50% × Market value of your positions. Taking the greater value is what keeps a market drop from erasing the SMA you've already earned.
What moves your SMA?
Increases it: Market appreciation ($0.50 for every $1 it rises); New deposits (100% until you use them).
Decreases it: New purchases (consume SMA at 50% of the amount); Cash withdrawals (100%, dollar for dollar).
⚠️ A drop in market value does not reduce your SMA. It only goes down when you buy or withdraw.
What is a Reg T margin call?
Unlike the maintenance call (when your portfolio falls below the maintenance margin), the Reg T call is generated by a new purchase that exceeds your available SMA.
Formula: Reg T call amount = (50% × Purchase amount) − Available SMA before the purchase. If the result is positive, that's the amount you must cover.
How is it resolved?
You have a limited time from the purchase that generated it to cover it — generally up to 3 business days (T+3), depending on what Regulation T and Apex Clearing's policies require, a period the firm may shorten. You can cover it by:
depositing cash for the call amount;
depositing securities worth 2x the amount; or
selling securities worth 2x the amount.
⚠️ You cannot cover it just by waiting for your positions to rise in value.
⚠️ If it isn't covered in time, Hapi may liquidate your positions partially or fully, even without prior notice, and without you being entitled to choose which securities are sold or to an extension of the deadline.
Examples (illustrative)
Account that uses all its Buying Power: You deposit $20,000 and buy $40,000. Portfolio value = $40,000 − $20,000 = $20,000; Reg T requirement = 50% × $40,000 = $20,000; SMA = $0.
Account that leaves Buying Power unused: You deposit $5,000 and buy $8,000. Portfolio value = $8,000 − $3,000 = $5,000; Reg T requirement = 50% × $8,000 = $4,000; SMA = $1,000.
If you have questions or had issues with margin, write to us and we'll review it with you.
Margin risks and legal notice
Using margin involves risk and is not suitable for all investors. Margin is subject to approval, eligibility, and signing a margin account agreement.
You can lose more money than the amount you initially deposited in your margin account.
The firm can sell your securities or other assets without contacting you first to cover a margin deficiency.
You are not entitled to choose which securities are sold, nor to an extension of the deadline to cover a margin call.
The firm can increase its "house" maintenance requirements at any time, without prior notice.
Interest is charged on balances financed with margin, at the applicable margin rate in effect.
Margin is subject to Federal Reserve Regulation T and FINRA Rule 4210, as well as market conditions and the firm's internal policies.
Past performance does not guarantee future results. This content is for informational purposes only and does not constitute advice, a recommendation, or an offer to buy or sell securities.
Securities are offered through Hapi Securities LLC, member FINRA/SIPC (CRD #311868). Accounts are custodied and cleared by Apex Clearing Corporation. Hapi Securities LLC is self-directed and does not make investment recommendations.