Definition: A margin call occurs when the value of the collateral in a margin account falls below a certain level, requiring the investor to deposit additional funds or securities to meet the margin requirement.
Historical Context: Margin lending where investors borrow money to buy securities, became popular in the late 1800s, particularly for financing railroads.
Terminology:The term "margin call" likely emerged alongside the practice of margin lending, as brokers would "call" on investors to "margin" their accounts when the value of their investments declined.
First Recorded Usage: While the exact date is difficult to pinpoint, the Oxford English Dictionary indicates that "margin call" was first recorded between 1888 and 1960-65.
Significance: Understanding the history of margin calls is important for investors as it highlights the risks associated with borrowing money to invest and the potential consequences of failing to meet margin requirements.
Example: If an investor borrows $10,000 to buy stock with a margin account and the value of the stock drops significantly the broker may issue a margin call requiring the investor to deposit additional funds to cover the potential losses.

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