A margin call is when your broker demands more funds for your leveraged stock account. It happens when the value of your borrowed-funded investments drops, and your own money (equity) in the account falls below a set "maintenance margin."
How it works (Pakistani Example):
You buy shares: You buy PKR 100,000 of Engro Corporation Limited (ENGRO) shares on the PSX using Margin Trading System (MTS). You pay PKR 20,000 (20% initial margin), broker lends PKR 80,000.
Price drops: ENGRO shares fall, making your PKR 100,000 holding worth PKR 90,000.
Equity too low: Your equity is now PKR 10,000 (PKR 90,000 - PKR 80,000). If the "maintenance margin" is 15%, your PKR 10,000 (11.11%) is too low.
Margin Call Issued: Broker demands you deposit PKR 3,500 (to reach 15% of PKR 90,000 = PKR 13,500).
If you don't meet it:
Forced Sale: Your broker can sell your shares (e.g., ENGRO) to cover their loan.
More Losses: You could lose more than your initial PKR 20,000.
In Pakistan, the NCCPL monitors margin requirements for MTS and Futures.