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FINRA Margin Debt

Total debit balances in customers' securities margin accounts at FINRA member broker-dealers, measuring investor leverage in the stock market.

Source: FINRA (Financial Industry Regulatory Authority)
View FINRA Margin Debt Chart & Historical Data

What It Measures

FINRA Margin Debt measures the total amount borrowed by investors against securities held in margin accounts at broker-dealers. This represents money borrowed to purchase securities, using existing portfolio holdings as collateral.

    The data includes:
  • Debit Balances: Total amount owed by customers in margin accounts (the primary measure of margin debt)
  • Free Credit Balances (Cash): Unused cash in customers' cash accounts
  • Free Credit Balances (Margin): Unused cash in customers' margin accounts

Margin debt is reported by FINRA member firms pursuant to FINRA Rule 4521(d), which requires monthly reporting of customer margin balances on a settlement date basis.

Why It Matters

Market Sentiment Indicator: Rising margin debt typically indicates bullish investor sentiment and increased risk appetite, while falling margin debt suggests caution or forced deleveraging.Leverage Risk: High margin debt amplifies both gains and losses. When markets decline, margin calls can force selling, accelerating downturns.Market Top Warning: Historically, margin debt peaks have coincided with or preceded major market tops. Record margin debt levels warrant caution.Contrarian Signal: Extremely low margin debt after a crash can signal capitulation and potential buying opportunities.Credit Conditions: Margin debt growth reflects broader credit availability and investor willingness to take leveraged positions.

How to Interpret

Absolute Level: Compare current margin debt to historical levels. All-time highs suggest elevated risk; lows after crashes may signal opportunity.Year-over-Year Change: Rapid increases (>30% YoY) often precede corrections. Negative YoY changes typically occur during or after market declines.
    Excess Leverage (Key Metric): Margin Debt YoY% minus S&P 500 YoY%. This shows when leverage growth exceeds market growth:
  • Above +30%: Major warning sign—leverage growing much faster than the market (preceded 2000, 2007, 2021 tops)
  • +10% to +30%: Elevated—investors adding leverage faster than market appreciation
  • -10% to +10%: Normal—leverage roughly tracking market moves
  • Below -10%: Deleveraging—investors reducing exposure relative to market
Free Credit Balances: Rising free credit balances alongside falling debit balances signals investors moving to cash—a defensive posture.Trend Direction: Several months of consecutive increases or decreases are more significant than single-month moves.

Key Levels to Watch

LevelInterpretation
Above $900BHistorically elevated leverage, increased market risk
$700B-$900BHigh margin debt, typical of bull market peaks
$500B-$700BModerate leverage levels
$300B-$500BBelow-average margin debt, often post-correction
Below $300BLow leverage, potential capitulation or early recovery

Historical Context

FINRA margin debt reached an all-time high of $936 billion in October 2021 before declining during the 2022 bear market. Previous peaks occurred in March 2000 ($278B before the dot-com crash), July 2007 ($381B before the financial crisis), and April 2015 ($507B). Margin debt tends to track the S&P 500 closely, often with exaggerated moves in both directions.

Limitations

    Margin debt data has several limitations:
  • Monthly frequency means it lags real-time market conditions
  • Does not capture leverage through options, futures, or other derivatives
  • Does not include securities-based loans from banks
  • Institutional leverage may differ from reported retail margin
  • Free credit balances include both intentional cash holdings and proceeds awaiting reinvestment
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