Record margin debt: retail investors join the stock market borrowing
FINRA data show margin debt near $1.5 trillion and Robinhood's margin book hit $21.6 billion. How margin works, why it is growing and what the risks are.
Key takeaways
- Total margin debt reached an all-time high of about $1.5 trillion in June, according to FINRA data cited by CNBC.
- Robinhood’s margin book grew to a record $21.6 billion in the second quarter, up 127% from a year earlier.
- Margin can magnify gains, but falling prices can bring margin calls or forced sales that deepen losses.
- Not all of the increase reflects fresh borrowing decisions.
The news
Borrowing against stock portfolios has climbed to record levels, and ordinary investors are part of it. CNBC reports that total margin debt hit around $1.5 trillion in June, per the Financial Industry Regulatory Authority. That figure covers institutional investors such as hedge funds as well as retail accounts.
Not all of the rise comes from new borrowing decisions. CNBC notes that when equities rise, an investor may need to cover a short position that has been marked to market, which raises measured margin balances.
How margin works
Margin means borrowing from a broker to buy securities, using existing holdings as collateral. It increases buying power and returns when prices climb. The cost comes when prices fall: if the account’s value drops far enough, the broker can demand more money through a margin call, and an investor who cannot meet it may be forced to sell at lower prices. That feedback is why margin balances draw attention during stock market sell-offs.
The retail side
Robinhood’s margin book reached a record $21.6 billion in the second quarter, up 127% year over year and 332% from $5 billion in the second quarter of 2024. Eligible users need a portfolio of at least $2,000 to use margin on the platform.
| Measure | Figure |
|---|---|
| Total US margin debt (FINRA, June) | About $1.5 trillion |
| Robinhood margin book, Q2 2026 | $21.6 billion |
| Robinhood margin book, year-over-year | Up 127% |
| Robinhood margin book vs. Q2 2024 | Up 332% |
Devin Ryan, head of financial technology research at Citizens, told CNBC that Robinhood has worked to attract customers who use margin because they trade most actively. He pointed to transfer bonuses, low margin rates and high yields on cash. Brokers earn interest on margin loans, and active traders can generate additional trading revenue. Ryan also cited smartphone access and a smooth mobile experience as reasons borrowing has become easier.
Robinhood disputed that framing. A spokesperson said the company does not believe it is accurate to say its promotions target active traders who use margin, that it tries to meet users where they are, and that it rejects any suggestion that it encourages risky trading. CNBC notes other parts of the business are growing too, including retirement assets, which have nearly quadrupled in two years.
One investor’s experience
CNBC’s story follows Hy Luu, a 29-year-old engineering consultant in Houston who began using margin in 2021 to buy Tesla shares and had more than $100,000 of margin debt about a year later. When Tesla fell about 65% in 2022, ending that year at $123.18, he worried about a margin call. He refinanced the Houston house he shares with his mother for an extra $30,000 and used it to pay down the balance. In June he exercised $165,000 on five Tesla call options and bought 500 shares at $330, which took his borrowing above $156,000. He told CNBC the strategy is risky and that he does not recommend it to anyone.
Is it greed?
Sam Huszczo, chief investment officer at SGH Wealth Management, sees the bull run, with several record highs this year, feeding a shift in psychology. He described margin growth as greed that is “certainly creeping into pockets” of the market but not everywhere, and said the market is “way healthier” than people think. He also acknowledged that rising margin debt and risky products such as leveraged ETFs add fragility, and said investors should separate legitimate momentum investing from reckless chasing.
What to watch
The next FINRA margin figures, the broker earnings that show margin balances, and how leveraged positions behave if prices fall. This article reports published data and commentary and is not investment advice.
Prepared with AI assistance from public sources and reviewed under our editorial policy. Not investment advice.
