Financial Dictionary
special miscellaneous account (SMA)
- An account in which balances in excess of the amount required under Regulation T are placed. Funds in an SMA may be used to purchase more securities on margin or they may be withdrawn in cash. Suppose a customer purchases $10,000 of securities and puts up the minimum 50% margin required by the Federal Reserve under Regulation T. If the securities subsequently rise in value to $14,000, the new $7,000 loan value (50% of the market value) is $2,000 more than is currently borrowed on the securities. The $2,000 in the special miscellaneous account may be withdrawn in cash as a loan or it may be used to purchase up to $4,000 in additional securities. See also adjusted debit balance.
