Regulation T & Margin Requirements
The Federal Reserve's Regulation T sets the initial margin requirement — currently 50% of a purchase — and payment deadlines; FINRA adds minimum maintenance margin of 25% of market value for long positions (30% for short).
Expect a “who sets it?” trap: the answer hinges on the Fed (Federal Reserve Board) owning the initial Reg T requirement, while FINRA owns maintenance and the SEC owns disclosure/anti-fraud oversight — pick the wrong regulator and you miss. Calculation items hand you a market value and ask for the deposit, or test the $2,000 minimum equity floor to open a long margin account — except the deposit can never exceed 100% of a cheap purchase (full cash payment satisfies it even if equity stays under $2,000). The classic move is a maintenance call: equity slips below the floor, and you deposit cash/marginable securities or get sold out.
Don’t confuse this with freeriding, a cash-account Reg T violation — selling before paying triggers a 90-day freeze; no margin involved. Short selling must occur in a margin account. Opening one requires the agreements first: the credit and hypothecation agreements are mandatory, the loan-consent agreement optional — versus a cash account paying in full. Memory hook: Fed = Initial, FINRA = Final upkeep.
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