A security (e.g., a stock) that doesn’t meet the requirements of an exchange for being traded (purchased) on margin (margin trading). For margin trading, customers to a brokerage will not be able to finance the purchase of non-marginal securities as such securities are, in essence, not eligible for margin trading. In other words, investors cannot borrow up to a specific percentage of the market value of these securities. Marginability is subject to a specific set of conditions such as a minimum price (stocks trading at below $5 are not marginable), venue (marginable securities usually trade on organized exchanges, and hence stocks trading on pink sheets are non-marginable), and the stocks of companies that have newly gone public are likewise non-marginable. Such securities don’t allow investors to partially fund their trades using borrowed money. These trades must be entirely funded by an investor’s cash.

Non-marginability is set by exchanges to mitigate risks (and reduce cases of uncovered margin trades) associated with volatile securities.