Bank of America Corp. increased margin requirements to 100% for wealth-management and self-directed brokerage clients to trade certain stocks, as firms impose limits amid wild price swings sparked by investors on social media.
The margin requirements apply to Merrill Lynch wealth-management clients and individual traders using the Merrill Edge platform, according to Bank of America. Margins for stock trading are typically around 30%, although they can vary based on concentrations in client holdings.
“Due to recent significant price volatility, we have implemented a 100% margin requirement on certain securities,” Bank of America said Thursday in an emailed statement. “We will continue to monitor the markets and may add or remove securities as conditions warrant,” it said, without specifying which stocks were affected.
Shares of GameStop Corp. and AMC Entertainment Holdings Inc. are subject to the increased margin requirements, according to a person familiar with the situation. The stocks are among those that have fluctuated, driven by investors communicating on forums like Reddit and using trading apps including Robinhood.
Earlier Thursday, Bank of America temporarily restricted clients from opening new stock positions for GameStop and AMC during a period of elevated volatility, but still allowed them to exit long and short positions, the person said. The restrictions have now been lifted, the person said.
Robinhood Markets and other major online brokerages, including Interactive Brokers Group Inc. and Morgan Stanley’s E*Trade, took the highly unusual step ofcurbing trading Thursday in GameStop and AMC. E*Trade said it expects to resume normal operations Friday.
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