Restricted account

A restricted account is a margin account that contains less than the mandated amount of equity, as required by Regulation T or the standards of the individual brokerage (if higher). The situation arises when the aggregate market value of shares purchased on margin falls below the amount of the loan used to acquire them.

When sales are made from this account, the proceeds are used to reduce the shortfall. Once the shortfall has been cleared, the restriction is removed and the account owner can begin to make purchases again.

A restricted account is also known as a blocked account.