Margin Requirements

The FINRA margin requirements sit alongside Reg T but cover a different slice of the margin landscape:

• Reg T (set by the Federal Reserve under its Exchange Act authority) governs initial margin on equity purchases
• FINRA margin requirements impose maintenance and instrument-specific requirements. Reg T also reaches non-equity securities through good-faith margin and incorporates approved options provisions; security futures use the joint SEC/CFTC framework and applicable FINRA requirements.

Both apply simultaneously to a typical equity margin account: Reg T at the moment of purchase, FINRA margin every day thereafter.

The Layered Margin Framework

Two requirements govern margin transactions, and they overlap rather than conflict:

For an ordinary margin-equity purchase of $100,000, Reg T's 50% initial requirement is $50,000. FINRA's applicable maintenance requirements continue as the account changes. Reg T also has ongoing credit and withdrawal provisions; it does not simply stop applying after settlement.

Exam Tip: Gotchas

• Reg T is the FRB's INITIAL margin rule (50% of equity purchases); the FINRA margin requirements govern MAINTENANCE margin (25% long, 30% short). Both apply simultaneously: Reg T at the time of purchase, FINRA margin every day thereafter.

Maintenance Margin

Once a position is established, the customer's equity in the account must stay above the maintenance margin floor:

If the customer's equity falls below the maintenance margin floor, the firm issues a maintenance call. The customer must deposit cash or marginable securities to bring equity back to the floor. If the call is not met, the firm liquidates positions to satisfy the call.

How Concentrated Positions Get Higher Maintenance

A customer whose account has more than 50% concentrated in a single security can face higher than 25% maintenance margin. The exact threshold varies by firm, but the rule allows firms to apply higher house requirements to concentrated or lower-priced positions, which adds a buffer above the FINRA floor.

Real-world example: A customer holds 10,000 shares of one stock at $20 = $200,000 market value, with $50,000 of margin debt. Equity is $150,000. The 25% FINRA maintenance is $50,000, well below the $150,000 equity. But if the firm sets a 35% house requirement for concentrated positions, maintenance becomes $70,000, still well below the $150,000 equity, so no call yet. The position has cushion above the higher house floor.

Exam Tip: Gotchas

• For short stock priced at least $5, use the greater of $5 per share or 30% of market value. Below $5, use the greater of $2.50 per share or 100% of market value. The familiar 30% figure is not the whole short-stock schedule.
• Firms may apply higher HOUSE requirements above the FINRA floor. A firm cannot go below 25%, but it can go above. The 25% / 30% are floors, not ceilings.

Intraday Margin Requirements (the PDT regime was repealed)

The Pattern Day Trader (PDT) rule was repealed effective June 4, 2026. The PDT designation, the 4-day-trades-in-5-business-days test, the $25,000 minimum equity, and day-trading buying power no longer exist. The current framework works on an intraday margin deficit instead.

How the Intraday Margin Deficit Works

For each margin account (other than a good-faith or portfolio-margin account), on any day the account has a transaction that reduces its intraday margin, the firm determines the account's intraday margin deficit.

• The deficit must be satisfied as promptly as possible, and it stays outstanding until satisfied or until the close of the 15th business day
• Small-deficit exception: a deficit at or below the lesser of 5% of equity or $1,000 does not count toward the practice of late satisfaction. It still requires prompt satisfaction.

The 90-Day Restriction

A practice of late satisfaction plus a deficit unsatisfied by the fifth business day's close triggers policies preventing new or increased short positions or debit balances, except a debit arising from closing a short.

The restriction lasts 90 calendar days after that fifth business day or until the deficit is satisfied, whichever occurs first. Expiration of the deficit's fifteen-business-day outstanding period does not itself satisfy it for lifting the restriction.

Exam Tip: Gotchas

• The legacy PDT thresholds were repealed effective June 4, 2026 in the local current-rule source. The replacement requires deficit determination on covered days. The small-deficit exception affects the practice test, not whether a deficit exists or must be satisfied.
• A practice of missing the 5th-business-day deadline brings a 90-day restriction on new short positions or debit balances. A single deficit stays outstanding only until satisfied or the close of the 15th business day.
• The intraday-margin framework does NOT change the 25% / 30% maintenance margin floors. Those still apply to overnight positions every day.

Portfolio Margin

The FINRA margin framework also authorizes a portfolio margin methodology for eligible customers:

• Available to eligible customers (typically equity ≥ $100,000)
• Margin requirement = theoretical loss of the portfolio under stressed scenarios
• Risk-based; not a flat percentage of market value

Portfolio margin is preferred by sophisticated customers running diversified or hedged strategies. A portfolio with offsetting long and short positions may have a much smaller theoretical loss than its gross market value, so portfolio margin can produce a lower margin requirement than strategy-by-strategy Reg T calculations.

Think of it this way: Reg T treats every position in isolation: $100 of stock requires $50 of equity, regardless of whether the customer is also short a related security. Portfolio margin treats the entire account as one risk unit: a long equity position partially hedged by an index put might require less margin than the long position alone, because the put offsets some downside risk under stress scenarios.

Exam Tip: Gotchas

• Portfolio margin is available to ELIGIBLE customers, typically with at least $100,000 equity. It is not the default; it is an alternative methodology the customer must affirmatively elect, with the firm's approval based on suitability and account size.
• Portfolio margin uses theoretical-loss stress scenarios, not flat percentages. A hedged portfolio may have a small theoretical loss and therefore a small margin requirement. The exam may probe whether portfolio margin is "lower" or "higher" than Reg T; the answer depends on the portfolio.

What Should You Check on Exam Day?

• Do you know the maintenance margin floors for long positions (25%) versus short positions (30%), and why short positions require more?
• Can you state that the Pattern Day Trader rule was repealed effective June 4, 2026, replaced by the intraday margin deficit framework?
• Do you know the de minimis carve-out for an intraday margin deficit: the lesser of 5% of account equity or $1,000?
• Can you state what triggers the 90-day restriction: missing an intraday margin deficit deadline by the 5th business day?