Security Deposit (Noun)
Meaning
The amount of collateral a customer deposits with a broker when borrowing from the broker to buy securities.
Classification
Nouns denoting possession and transfer of possession.
Examples
- A customer typically provides a security deposit when trading on margin to cover the risk of a potential loss.
- When a client opens a margin account with a brokerage firm, they must pay a security deposit as collateral.
- Brokers may ask for a security deposit before allowing customers to engage in certain high-risk investment strategies.
- To ensure timely repayment, brokers require clients to pay a security deposit upfront before using their services.
- Investors must put a security deposit down on their brokerage accounts when borrowing funds for securities purchases.