Jurisdiction(s):
United Kingdom

Margin Lending over Listed Shares: Structuring, LTV and Margining, Security and Custody, Equity-Style Protections, Enforcement and Regulatory/Disclosure Issues

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Practice notes

Introduction to margin loans

What is a margin loan?

At a high level, a margin loan is credit extended to a borrower, secured by liquid assets pledged for the lender’s benefit. The collateral usually consists of instruments traded on public markets or exchanges, most commonly the borrower’s listed shares, which serve as the underlying assets. The outstanding balance under the margin loan facility is compared with the value of those assets through a loan to value test. Should the collateral’s value drop beneath an agreed threshold, a margin call arises, obliging the borrower to act—typically by adding cash or further security—to return the loan to value ratio to the agreed level. Because asset values are set by exchange-traded prices, the loan to value can fluctuate rapidly and is therefore usually checked daily at the close of trading on the relevant exchange, when prices are settled. This Practice Notice concentrates on margin loans secured over listed shares, though margin loans may alternatively be secured over other asset classes...

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Web page updated on 21/05/2026

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