Quick Answer
Covered firms must record each day every case in which initial or additional customer margin must be obtained under FINRA rules or Reg T. The record identifies the account, required amount, and when and how the margin was satisfied. Individual entries may constitute the record; a separately consolidated record is not required.
The daily-margin record is the recordkeeping companion to the substantive FINRA margin requirements. The substantive rule sets the margin floors (initial margin, maintenance margin, the intraday-margin-deficit standard, portfolio margin).
The recordkeeping companion forces the firm to document that it computed and collected those margins on a daily basis. Without the record, an examiner cannot reconstruct whether the firm was actually meeting its margin obligations on any given day.
What the Daily Record Must Show
A member carrying customer securities margin accounts, or subject to the specified CDS margin rule, records each case requiring initial or additional margin. The required information is:
| Required Field | Substance |
|---|---|
| Customer name / account number | Identifies which account the record covers |
| Required margin | The amount of initial or additional margin to be obtained under FINRA rules or Reg T |
| Date and manner of satisfaction | When cash or securities were deposited, or how the requirement was otherwise met |
Each field serves a specific compliance purpose:
- Customer name / account number: The record must be account-specific so that an examiner can reconstruct compliance for any individual customer
- Required margin: Forces the firm to compute the obligation explicitly each day, not just monitor in aggregate
- Satisfaction details: Demonstrate when and how the required margin was obtained or otherwise satisfied
A firm may use deficiency and action columns, but those particular labels are not a universal mandated template. Individual or linked entries can satisfy the rule if the required facts remain identifiable and retrievable. A margin-call flag alone does not document later satisfaction.
The Daily Cadence
The record is daily, not weekly or monthly. Margin obligations move with market prices, so a position that meets margin today may not meet it tomorrow. The daily record captures the firm's compliance state on each business day.
Exam Tip: Gotchas
- The daily-margin record is a RECORDKEEPING requirement layered on top of the SUBSTANTIVE margin requirements. Failure to maintain the daily margin record is a recordkeeping violation independent of whether the firm actually under-collected margin. Two requirements, two possible violations from the same operational failure.
- The daily record must show ACTION TAKEN to satisfy any deficiency. Recording that a deficiency exists is not enough; the record must show what the firm did about it (call issued, liquidation, deposit). The exam may probe scenarios where the firm noted the deficiency but did not document any cure action.
Purpose: Audit Trail for Margin Compliance
The daily record creates an audit trail for examiners and supervisors to verify the firm computes and collects required margin daily. Without the record, an examiner cannot reconstruct whether the firm under-collected margin on any given day.
Think of it this way: The substantive margin requirements set how much margin is required. The daily-margin record is the procedural proof that the firm computed and collected the right amount. Both are required: a firm that computes margin perfectly but fails to keep the daily record has a recordkeeping violation independent of any substantive violation.
What a Compliant Record Looks Like
A compliant daily-margin record is typically generated automatically by the firm's margin system. It includes:
- Entries identifying every relevant customer account and case requiring margin
- The day's calculated required margin
- The day's actual customer equity
- Any deficiency
- The firm's documented response to the deficiency (notice issued, liquidation executed, payment received)
The record remains subject to applicable SEC preservation requirements. Identify the specific record category and retention provision rather than treating every supervisory output as having one universal period.
Exam Tip: Gotchas
- The record must identify each relevant account and margin requirement. A firm-wide aggregate alone loses that information. The rule does not independently require a zero-valued entry for every account on every day when no initial or additional margin must be obtained.
How the Daily Record Connects to the Margin Framework
The daily-margin record is one of three operational requirements that complete the margin regulatory infrastructure:
| Requirement | Function |
|---|---|
| Substantive margin floors | Initial, maintenance, intraday-margin deficit, portfolio margin |
| Daily-margin record | Daily recordkeeping of required margin |
| Margin-extension procedure | Procedure for extending Reg T / customer-protection deadlines |
A firm with a robust margin operation hits all three: it computes compliant margin, maintains compliant daily records, and processes extensions when warranted. A failure in any of the three creates a separate violation.
What Should You Check on Exam Day?
- Can you identify the required amount and date and manner of satisfaction for each relevant account?
- Do you know why a firm that computes margin correctly can still have a separate recordkeeping violation for the daily margin record?
- Can you confirm the daily margin record must be kept per customer account rather than as one firm-wide aggregate total?
- Do you know what the daily margin record must show beyond the existence of a deficiency, such as the action taken to cure it?