Exhaust Price

Exhaust price - An exhaust price is the price that a broker must obtain to liquidate a client's equity when he or she has not met his/her margin. The exhaust price will be the price that the stocks will be sold at to meet the margin requirement. This situation occurs when an investor buys on margin, which mean the investor does not have the money to buy the stocks and so he or she will borrow the money and offer these very same stocks that he or she is about to buy as collateral for the loan. If there is a sharp decline in stock prices after that, a brokerage would issue a margin call and the investor would have to deposit extra funds to cover the margin because the stocks now cannot do it. If the investor cannot meet the margin call, the exhaust price would be the amount set to meet the balance left on the margin.