Definition of Restricted Account

Restricted Account is a margin account that has less than 50% equity but more than 25% equity.

Applying "Restricted Account" to Securities Exams:

A margin account becomes restricted when the customer’s equity falls in the account as a result of market losses. Reg T. requires that the customer deposit 50% of the value of the long or shot position. As the value of the securities fluctuate in the market place the equity in the account will rise and fall accordingly. Once the equity in the account falls below 50% the account is said to be restricted. The customer is not subject to any additional margin requirements and may purchase additional securities by depositing 50% of the purchase price.

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