Legal Definitions - maintenance call

A maintenance call is a demand made by a securities broker to a customer to put up money or stock as collateral when the broker finances a purchase of securities. This demand usually occurs when the market prices of the securities are falling. It is also known as a margin call.

For example, if a customer buys stocks worth $10,000 on margin, the broker may require the customer to maintain a minimum balance of $5,000 in their account. If the value of the stocks falls below a certain level, the broker may issue a maintenance call, requiring the customer to deposit more money or sell some of the stocks to maintain the minimum balance.

Another example of a maintenance call is when a corporation issues callable securities, which can be redeemed by the corporation before their maturity date. The corporation may issue a maintenance call to redeem these securities if the interest rates fall, allowing them to issue new securities at a lower rate.

Overall, a maintenance call is a demand for additional collateral or payment to ensure the security of a financial transaction.