Schwab is tightening margin on tax-driven long-short trades. Forced deleveraging is the risk to watch.

Charles Schwab is raising house maintenance requirements on portfolio margin accounts running paired long-short positions structured around tax-loss harvesting, warning clients that margin calls may arrive faster and with less notice than they expect. The mechanism that made these trades popular is the same one that makes them fragile: portfolio margin allows margin requirements to be set on net position risk using stress-test models, which rewards hedged-looking structures with lower capital requirements. When correlations break or one leg gaps, the apparent hedge fails and the margin call arrives before the client has time to rebalance. Schwab's standard framework already allows it to liquidate positions without client consent and to increase house maintenance requirements at any time without prior written notice. The trigger here is growth in a specific tax trade that has become crowded, which is itself a signal of concentrated positioning. For high-net-worth UK investors or advisers running similar structures through US brokers, the practical action is to stress-test portfolio margin positions against a 15% adverse move in the long leg while correlations with the short leg simultaneously deteriorate.