Overview

Margin accounts allow you to purchase securities using money that is, in part, borrowed from a brokerage. This leverage increases your buying power, allowing you to invest more and potentially earn greater returns. However, if your investment decreases in value, you can lose more than your initial investment. This makes buying on margin a high-risk investment strategy.

To learn more about margin, check out the article: What is margin?

Eligibility criteria

To assess if a margin account is appropriate for you, we’ll ask you about your financial goals and your current financial situation. If you’re approved for a non-registered margin account, you can continue to open a margin account.

How to open a margin account

You can only open a margin account on the Wealthsimple desktop experience. 

Follow these steps to open a margin account:

1. Log in to your Wealthsimple account
2. Scroll down on the Home page and click + Add an account
3. Select Non-registered from the options
4. Click Next
5. Under what to invest in, select Self-directed margin account 
6. Follow the prompts to confirm your information
7. Review the Agreement details, then select Confirm
8. Read the Margin Trading Risk Disclosure, then select Confirm
9. Your account is open and you can make a deposit

If your application is rejected

Margin trading is not for everyone. If your account is rejected, it is likely because the goals and financial information you provided are not appropriate for margin trading. You can either close the account or open a non-registered account.

Buy a security in your margin account

Follow the steps below to buy a security (such as a stock or ETF) in your margin account:

1. Log in to your Wealthsimple account
2. In the Search name or symbol field at the top of the page, type in the name of the stock or ETF you'd like to buy
3. Select the stock or ETF you'd like to buy from the list
4. Under Buy on the right side, select an Order type from the menu
5. Fill out the required fields for the order type
6. Choose your Non-registered margin account to buy the stock or ETF
7. Click Review

Sell a security in your margin account

Follow the steps below to sell a security in your margin account:

1. Log in to your Wealthsimple account
2. Select your desired Non-registered margin account
3. Scroll down. Under Holdings, select the stock or ETF in your portfolio you'd like to sell
4. Under Sell on the right side, select an Order type from the menu
5. Fill out the required fields for the order type
6. Choose your Non-registered margin account to sell the stock or ETF from
7. Click Review
8. Review your order, then click Submit order

Key concepts and terms

Review the concepts and terms used in your margin account below:

Margin available

Excess margin in the account. A negative balance means the account is under-margin which results in a margin call.

CAD available

Amount of available CAD money in the account. If this is a debit balance (less than $0), this will show as $0 and the debit amount will be under CAD margin used.

USD available

Available USD money in the account. If this is a debit balance (less than $0), this will show as $0 and the debit amount will be under USD margin used.

CAD margin used

Amount of CAD dollars owed to Wealthsimple as a result of trading on margin. This balance  includes interest and other charges to the account that result in a debit balance. This amount accrues interest on a daily basis and is posted monthly.

USD margin used

Amount of USD dollars owed to Wealthsimple as a result of trading on margin. This balance includes interest and other charges to the account that result in a debit balance. This amount accrues interest on a daily basis and is posted monthly.

Max buying power

The theoretical total purchasing power for securities with maximum leverage or lowest margin rate (e.g. margin requirement).

Understand margin calls

You are required to maintain a minimum amount of Margin available in your account, known as the maintenance margin. This means your Margin available balance must stay above $0. If this balance falls below $0, the brokerage will issue a margin call. If you don’t respond to a margin call by the indicated deadline, or extenuating market conditions exist, the brokerage can liquidate your securities.

How to respond to a margin call

If your Margin available balance falls below $0, you will receive an email letting you know your account is in a margin call. This notification includes the amount required, a deadline, and different ways to fund your account. Your account is restricted to closing positions until you comply with the margin call and your Margin available balance is above $0.

To respond to a margin call, you must fund your account with the amount required to bring your buying power above $0.

Use one of the methods below to fund your account:

• Close limit buy orders in your margin account
• Sell securities in your margin account
• Transfer margin eligible securities to your margin account
• Make a deposit from a linked bank account
• Wire transfer
• Interac e-transfer
• Move funds from your Wealthsimple Cash or other Wealthimsimple trade accounts
• Make a deposit from your Visa or Mastercard debit card

If you don't respond to a margin call

If you don’t respond to a margin call, or extenuating market conditions exist, the brokerage may liquidate securities in your account to bring your account up to the maintenance margin.

If the brokerage has liquidated all the positions in your account, and your account is still in a debit position (Margin available is below $0), your account is considered delinquent. You are required to resolve the debit before account restrictions are removed.