Margin and Securities Lending

This sheet condenses account approval, margin percentages, disclosure timing, stock lending, and the day-trading margin standard into one pass.

Which One-Liners Win Points?

• Collateral is not authorization. A cash account does not become a margin account just because securities sit as collateral; the firm needs an approved margin account and the customer's signed margin agreement.
• Initial margin opens the position; maintenance margin keeps it open. The two tests answer different questions and use different percentages.
• A Regulation T call runs on one payment period. Other margin deficiencies must be met as promptly as possible and within 15 business days.
• The locate requirement comes before the short sale, not after. Unless an exception applies, the firm must have a borrowing basis and document compliance first.
• The 90-day restriction needs two things together. A practice of missing intraday margin deficits, plus one deficit still unsatisfied after the fifth business day.
• The pattern day trader regime is gone. The intraday margin level replaced day-trade counts, the $25,000 minimum equity, and the day-trading buying-power multiple.

Which Numbers Matter Most?

How Does the Firm Track a Day's Margin Cushion?

• Intraday margin level (IML): the cash a customer could withdraw and still meet maintenance margin; when the account is short of that margin, the IML is negative.
• IML-reducing transaction: any purchase, sale, or withdrawal of cash or securities that lowers the IML.
• Intraday margin deficit: the day's largest negative IML, in absolute value, not the closing balance. An account can end the day fully margined and still owe a deficit.
• The customer satisfies the deficit with net deposits or any other increase in the IML, as promptly as possible.

Which Gotchas Trip Students Up?

• A margin call gives no guaranteed time to act. The firm may liquidate assets in any account at the firm without contacting the customer, even after setting a deadline; the customer stays responsible for any shortfall.
• The $2,000 minimum-equity floor has a purchase-cost exception. It does not require cash above the cost of the security purchased.
• One missed deficit is not enough for the 90-day restriction. The rule needs a practice of failing, plus one deficit unsatisfied past the fifth business day, and it only blocks new short positions or debit balances, not closing trades.
• Older material still describes the retired pattern day trader regime. Day-trading account approval and the day-trading risk disclosure statement are separate rules and still apply.
• A locate needs a documented borrowing basis, not just a belief. The firm must have borrowed the security, arranged to borrow it, or have reasonable grounds for timely delivery, and record that compliance.
• Borrowing a customer's fully paid or excess margin securities needs advance written notice, covering the loan's risks, financial impact, and the member's liquidation right.

One-Breath Recap

Margin borrowing starts with account approval and a signed margin agreement, since collateral alone never authorizes credit. Regulation T sets 50% initial margin on a long equity purchase, maintenance holds long stock to 25% of current market value, and short stock carries 150% total Regulation T margin plus a separate price-tiered maintenance test. Disclosures cover six risks and go out before opening a noninstitutional margin account and at least once a year; a Regulation T call is due within one payment period, other deficiencies within 15 business days. Stock loans support short-sale delivery, so a locate needs a documented borrowing basis. Day trading is no longer counted; the firm tracks each day's intraday margin level, and a practice of missing deficits, with one unsatisfied past the fifth business day, brings a 90-day restriction on new exposure.

Need more than the recap? Read the full Margin and Securities Lending unit.