> For the complete documentation index, see [llms.txt](https://advisorhub.syntheticfi.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://advisorhub.syntheticfi.com/product-deep-dive/margin-call-process.md).

# Margin Call Process

{% hint style="info" %}

## Maxing the credit limit isn't the same as a margin call

When a client maxes their credit limit they just can't draw more, they aren't called. Beyond that, there's a built-in cushion before a call is triggered. When a call does happen, the process depends on the custodian: Schwab and Pershing give the advisor time to resolve it with no auto-liquidation, while IBKR can auto-liquidate. The takeaway: leave a cushion.
{% endhint %}

### When does a margin call happen?

Maxing out the credit limit (the initial margin) is not the same as getting a margin call. When a client hits their limit, they simply can't draw more, they don't get called right away.

From that point, there's a built-in cushion. The exact size depends on the custodian and the holdings, but at maximum borrowing capacity it's meaningful. For most Schwab equities, for example, the market can fall around 30%\* before a margin call is triggered. A client who borrows less has an even larger cushion, borrow 30% of the portfolio and the cushion is roughly 60%\*.

That kind of cushion is a real advantage. Many securities-backed loans offer far less room before a call.

### How the process works by custodian

* **Schwab.** The Schwab margin department generally gives 3 business days to resolve a call. The primary advisor sees an alert in Schwab Advisor Center. If it goes unaddressed, the margin team calls the advisor directly. No software auto-liquidation.
* **Pershing.** Same process as Schwab.
* **IBKR.** IBKR can auto-liquidate once a client hits the margin limit. Because of this, it's especially important for advisors and clients to leave a cushion.

### The takeaway

Leave a cushion. The client controls how much room they have by how much they borrow, borrowing less leaves more buffer before a call is ever a concern. This matters most at IBKR, where auto-liquidation is possible.

***

[\* Important Disclosures](/disclosures.md)


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