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FAQs

Q. What if a security in the pledged investment account is no longer eligible to serve as collateral, or if while trading in the account, an ineligible security is purchased?

A. Ineligible securities are automatically excluded from your investment account for collateral valuation purposes, and your credit limit is adjusted accordingly. In certain circumstances, this could trigger a request for additional assets.

 

Q.  What happens when my securities go down in value?

A.  Depending on the relation between your account value, credit limit and amount borrowed, collateral devaluations may:

-      have no consequence
-      limit your access to funds, and/or
-      require a deposit of additional assets or an immediate payment

If the value of the collateral falls significantly, we may contact you to request that additional funds be placed into the collateral account. If your credit limit has been reduced due to a change in collateral value, it will be increased as your securities gain in value.



Q. What would cause the credit limit on my SBLOC to be reduced?

A. The credit limit will be automatically reduced if the borrowing power or “Advance Rate” value of your pledged securities no longer supports the approved credit limit. It is important that you verify your current credit limit and available credit before requesting advances or writing checks, as there will be no specific notice when the credit limit changes.

 

Q. Can I continue to get distributions while my account is pledged?

A. Generally, automatic distributions will be discontinued when the account is pledged and becomes the collateral for your SBLOC. In certain circumstances distributions may continue. Please contact your financial professional for details.