Series 65: 7.2.1.3.1. Marginable Securities

Taken from our Series 65 Online Guide

7.2.1.3.1. Marginable Securities

Not all securities can be purchased on margin. Nasdaq and all exchange-listed securities are allowed, as are U.S. government and municipal bonds. Over-the-counter securities are allowed if they are listed on the Federal Reserve marginable securities list.

However, newly issued securities must be publicly traded for at least 30 days before they can be purchased on margin. Mutual fund shares cannot be purchased on margin, but they can be used as collateral on a loan after 30 days. Penny stocks are not eligible for margin trading. OTC stocks can be traded on margin unless they have fewer than four market makers regularly submitting bids and offers, or they have fewer than 400,000 shares outstanding.

Remember that non-marginable securities do not add to an account’s buying power.

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SUMMARY TABLE

Marginable and Non-Marginable Securities

Marginable securities—securities that can be purchased on margin

Exchange-listed securities (including Nasdaq and NYSE securities)

U.S. government securities

Investment-grade bonds and debentures

OTC securities that are listed on the Federal Reserve marginable securities list

Non-marginable