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June 14, 2026
The Dispatch

Definition

Margin Call

A margin call is a demand from your broker to add funds when your account falls below the required margin.

When mark-to-market losses or rising margin requirements push your available balance below the minimum, the broker issues a margin call asking you to deposit more money. If you do not top up in time, the broker can square off your positions to protect against further loss.

With SEBI's upfront and peak margin rules, Indian brokers monitor margins in real time and may auto-square-off intraday F&O positions the moment they breach limits, sometimes without waiting. Keeping spare margin and watching MTM through the day is the main defence against forced exits.

Related terms

  • Mark to MarketMark to market (MTM) is the daily settlement of profit or loss on a futures position based on that day's closing price.
  • Peak MarginPeak margin is SEBI's rule requiring brokers to ensure full margin is available at the highest exposure point during the day, checked via random snapshots.
  • MTM MarginMTM margin is the amount collected to cover mark-to-market losses on open positions as prices move against you.
  • Margin Shortfall PenaltyA margin shortfall penalty is a fine levied when a trader fails to maintain the required upfront margin for F&O positions.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.