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Margin Accounts and Requirements

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Overview of Margin Requirements

The terms on which firms can extend credit for securities transactions are governed by federal regulation and by the rules of FINRA and the securities exchanges.

Some securities cannot be purchased on margin, which means they must be purchased in a cash account, and the customer must deposit 100 percent of the purchase price.

In general, under Federal Reserve Board Regulation T, firms can lend a customer up to 50 percent of the total purchase price of a margin security for new, or initial, purchases. 

The rules of FINRA and the exchanges supplement the requirements of Regulation T by placing "maintenance" margin requirements on customer accounts.

Under these rules, as a general matter, the customer's equity in the account must not fall below 25 percent of the current market value of the securities in the account. Otherwise, the customer may be required to deposit more funds or securities to maintain equity at the 25 percent level (referred to as a margin call). Failure to do so may cause the firm to liquidate the securities in the customer's account in order to bring the account's equity back up to the required level.

The FINRA rules governing margin accounts are as follows:

Interpretations of FINRA's Margin Requirements Rule

FINRA Rule 4210 (Margin Requirements) describes the margin requirements that determine the amount of collateral customers are expected to maintain in their margin accounts, including both strategy-based margin accounts and portfolio margin accounts. The rule explains the margin requirements for equity and fixed income securities, along with options, warrants and security futures.

The interpretations immediately follow the section of the rule to which they relate. The interpretations use a numbering convention of /##. For example: /01 of Rule 4210(a)(3).

Customer Margin Balance Reporting and Margin Statistics

FINRA Rule 4521 requires that member firms that carry customer margin accounts must submit — via the Customer Margin Balance Form — the following numbers:

  • the total of all debit balances in securities margin accounts
  • all free credit balances in all cash accounts
  • all securities margin accounts on a settlement date basis as of the last business day of the month

After collecting this data via the Customer Margin Balance Forms, FINRA displays it in aggregate form on our Margin Statistics page.

2017 Filing Due Dates

Period Ending Due Date
January 31, 2017 February 8, 2017
February 28, 2017 March 8, 2017
March 31, 2017 April 10, 2017
April 28, 2017 May 8, 2017
May 31, 2017 June 8, 2017
June 30, 2017 July 11, 2017
July 31, 2017 August 8, 2017
August 31, 2017 September 11, 2017
September 29, 2017 October 9, 2017
October 31, 2017 November 8, 2017
November 30, 2017 December 8, 2017
December 29, 2017 January 9, 2018

See Regulatory Notice 10-08 (Customer Margin Accounts) for more information.

Margin Disclosure Statements

Pursuant to FINRA Rule 2264 (Margin Disclosure Statement), no member shall open a margin account, as specified in Regulation T, for or on behalf of a non-institutional customer, unless, prior to or at the time of opening the account, the member has furnished to the customer, individually, in paper or electronic form, and in a separate document (or contained by itself on a separate page as part of another document), the specified margin disclosure statement. In addition, any member that permits non-institutional customers either to open accounts online or to engage in transactions in securities online must post such margin disclosure statement on the member's Web site in a clear and conspicuous manner.

Pursuant to FINRA Rule 4210(g), on or before the date of the initial transaction in a portfolio margin account, a member must provide customers with a special written disclosure statement describing the nature and risks of portfolio margining.

The disclosure statement must include an acknowledgement for all portfolio margin account owners to sign, attesting that they have read and understand the disclosure statement. Customers must also attest that they agree to the terms under which their portfolio margin account is provided.

Members must retain this signed acknowledgement and record the date of receipt.

FINRA Requests Comment on Proposed Amendments to FINRA Rule 4210 for Transactions in the TBA Market
January 27, 2014
SEC Approves Amendments to FINRA Rule 4210 (Margin Requirements)
October 26, 2012
Guidance on Low-Priced Equity Securities in Customer Margin and Firm Proprietary Accounts
April 4, 2011
SEC Approval and Effective Date for New Consolidated FINRA Rules Regarding Margin Requirements, Daily Record of Required Margin, and Extension of Time Requests
October 4, 2010
Guidance
FINRA Rule 4210 (Margin Requirements) describes the requirements for the extension of credit by firms that offer margin accounts to customers, in accordance with Regulation T of the Board of Governors of the Federal Reserve System.

FAQ
FINRA has received questions regarding FINRA's portfolio margin pilot program set forth in NASD Rule 2520(g) and incorporated NYSE Rule 431(g).

Investor Education
If you’re going to day trade—and it’s very risky to do so—you must abide by the rules, particularly those that deal with margin. If a brokerage firm designates you as a “pattern day trader,” then FINRA margin rules require that broker-dealer to impose special margin requirements on your day-trading account.
Investor Education
We are issuing this investor guidance to provide some basic information about day-trading margin requirements and to respond to a number of frequently asked questions that we have received. We also encourage you to read our Notice to Members and Federal Register notice about the rules.
Investor Alert
With investor purchases of securities "on margin" averaging more than $406 billion for the first nine months of 2013 (a 27 percent increase over the same period last year), we are re-issuing this alert because we are concerned that many investors may underestimate the risks of trading on margin and misunderstand the operation and reason for margin calls.
Investor Education
The continuing growth of the amount of customer margin account balances during the past year has caused some commentors to question whether the investing public is over leveraging its investment positions.
Podcast
Borrowing from your broker increases your purchasing power, and your risk of higher losses.
Investor Education
Pursuant to FINRA Rule 4521, FINRA member firms carrying margin accounts for customers are required to submit the following customer information: the total of all debit balances in securities margin accounts; and, the total of all free credit balances in all cash accounts and all securities margin accounts.
Investor Education
We are issuing this investor guidance to provide some basic facts to investors about the practice of purchasing securities on margin, and to alert investors to the risks involved with trading securities in a margin account.
Investor Education
We are issuing this investor guidance to provide some basic facts to investors about the mechanics of margin accounts.