SEC Approves FINRA "Intraday Margin Standards"

The SEC approved a FINRA amendment to replace its "current day trading margin provisions with a modern intraday margin standard."

The SEC said the amendment to FINRA Rule 4210 ("Margin Requirements") would eliminate provisions relating to ‘‘pattern day traders.’’ The SEC explained that a ‘pattern day trader’’ is "any customer who executes four or more day trades within five business days." The amendment removes several requirements under the rule including the "computation and use of ‘‘day-trading buying power,’’ and the minimum equity requirement of $25,000 for pattern day traders.

The SEC said the amendment would implement instead new intraday margin standards. In the proposal, FINRA stated that "the new provisions for intraday margin would ensure customers maintain equity in their margin account commensurate with the amount of market exposure they have at any given point in time during the trading day, irrespective of whether they engage in day trading." Under the new standards, members are required to determine the "intraday margin deficit" for each customer margin account on any day in which an "Intra-day Margin Level ("IML") - reducing transaction" occurs. Members may comply through real-time trade monitoring or end-of-day deficit calculation. Deficits must be satisfied promptly; customers who repeatedly fail to cure deficits within five business days face a 90-day freeze on creating or increasing short positions or debit balances. Deficits not exceeding the lesser of five percent of account equity or $1,000 are excluded from the "practice" determination. Portfolio margin accounts with less than $5 million in equity must maintain intraday margin substantially similar to end-of-day requirements.

FINRA proposed an additional amendment regarding the implementation date of the proposed rule change, saying it would issue a Regulatory Notice announcing an effective date of 45 days from the publication of that Regulatory Notice, and "to provide that members that need more time to implement the new requirements are permitted to phase-in implementation over a period of 18 months following the publication." FINRA stated that to aid members in preparing for implementation of the proposed rule change, it will provide "website training materials, illustrative examples and other guidance as appropriate regarding the application of intraday margin."

Comments on the additional amendment are due by May 8, 2026.