Other Margin Accounts

Beyond standard margin accounts, the Series 7 tests portfolio margin accounts, which have their own requirements and higher minimums. This section also covers the margin disclosure statement every non-institutional margin customer receives.

FINRA replaced its pattern day trader rule, including the $25,000 minimum equity requirement, with intraday margin standards effective June 4, 2026. This course does not test the old day-trading figures.

What Is Portfolio Margin?

Portfolio margin uses risk-based modeling instead of the fixed percentage requirements of Regulation T (Reg T):

• Computer models calculate theoretical gains/losses across multiple pricing scenarios
• Margin is based on the greatest projected net loss across all positions in a group of related securities
• Typically results in lower margin requirements for well-hedged, diversified portfolios

Think of it this way: Standard margin applies the same flat percentage to every position. Portfolio margin looks at the big picture and asks, "If the market moves against you, how much could you actually lose across all your positions?" A hedged portfolio (long stock plus protective put, for example) has less real risk, so it requires less margin.

What Is the Minimum Equity for Portfolio Margin?

• A firm's portfolio margin policies may not set customer minimum equity below $100,000, and that floor is available only to a firm with full, real-time intraday monitoring capability; a firm with partial real-time monitoring must set $150,000 to $500,000, and a firm with none, $500,000. A firm may impose a higher house requirement
• A $5,000,000 minimum applies only to an eligible participant who establishes or maintains unlisted derivatives in the portfolio margin account
• Individual retirement accounts (IRAs) are not eligible for portfolio margin at all

What Other Rules Apply to Portfolio Margin?

• Customers generally need approval for uncovered short option contracts to use a portfolio margin account, even if they do not plan to write options. Registered broker-dealer and futures commission merchant accounts, and customers legally barred from options trading, have exceptions. The firm must still confirm equivalent trading experience and sophistication and document its approval procedures
• On or before the first transaction date, the firm must deliver the written portfolio margin risk disclosure, obtain the acknowledgment signed by all account owners, and record its receipt date. This disclosure deadline is tied to the initial transaction date, not account approval
• Eligible products include margin equity securities, listed equity and index options, security futures, qualifying unlisted derivatives, warrants, and related instruments
• The firm must maintain robust controls to monitor credit exposure and concentration risk

Exam Tip: Gotchas

• Portfolio margin minimum starts at $100,000 for a firm with full real-time intraday monitoring, not $5,000,000. The $5,000,000 figure only applies to a customer holding unlisted derivatives in the account.
• Portfolio margin lowers requirements for hedged portfolios. If a question describes a well-diversified, hedged portfolio, portfolio margin will produce a lower requirement than Reg T.
• IRAs cannot use portfolio margin, no matter how large the account.

What Must the Margin Disclosure Statement Cover?

The firm must deliver a margin disclosure statement to each non-institutional customer, individually and in a separate document (or a separate page within another document), at or before opening a margin account; a firm that permits non-institutional customers to open accounts or trade online must also post the statement on its website. The disclosure must explain:

• The firm can force the sale of securities or other assets in any of the customer's accounts held at the firm, and the firm chooses which assets to sell, without notice
• The firm can increase its house maintenance margin requirements at any time without advance notice
• The customer is not entitled to an extension of time to meet a margin call
• The customer can lose more money than originally deposited
• The customer is not entitled to choose which securities or other assets in the account are liquidated to meet a call

This disclosure must be delivered again at least once per calendar year to all non-institutional margin customers; the annual delivery does not need to be a separate document.

Exam Tip: Gotchas

• The firm can liquidate margin positions without giving the customer notice or time. Students often assume the customer gets a chance to respond first; the disclosure explicitly states otherwise.
• The customer is not entitled to a time extension on a margin call. The firm decides whether to grant extra time, not the customer.
• A forced sale is not limited to the deficient account. The firm can sell assets in any of the customer's accounts at the firm and picks which ones to sell.

What Should You Check on Exam Day?

• Portfolio margin's $100,000 floor (full real-time monitoring only) and its $5,000,000 unlisted-derivatives minimum are two different thresholds; IRAs cannot use portfolio margin at all
• The initial margin disclosure must be its own document or page; the annual one does not have to be