[Federal Register Volume 91, Number 74 (Friday, April 17, 2026)]
[Notices]
[Pages 20731-20739]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-07485]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105226; File No. SR-FINRA-2025-017]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Amend FINRA Rule 4210 (Margin Requirements) To
Replace the Day Trading Margin Provisions With Intraday Margin
Standards
April 14, 2026.
I. Introduction
On December 29, 2025, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``SEC'' or the ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend FINRA Rule 4210 (Margin
Requirements) to replace its current day trading margin provisions with
a modern intraday margin standard.\3\
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Exchange Act Release No. 104572 (Jan. 9, 2026), 91 FR
1580 (Jan. 14, 2026) (File No. SR-FINRA-2025-017) (``Notice'').
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The proposed rule change was published for comment in the Federal
Register on January 14, 2026.\4\ The public comment period closed on
February 4, 2026. The Commission received comment letters in response
to the Notice.\5\ On January 28, 2026, the Commission extended the time
period in which the Commission must approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to approve or disapprove the proposed rule change to
April 14, 2026.\6\
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\4\ See Notice.
\5\ The comment letters are available at: https://www.sec.gov/rules-regulations/public-comments/sr-finra-2025-017 (``Comment
File'').
\6\ See Exchange Act Release No. 104732 (Jan. 28, 2026), 91 FR
4750 (Feb. 2, 2026) (File No. SR-FINRA-2025-017).
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On March 18, 2026, FINRA responded to the comment letters received
in response to the Notice.\7\ On April 2, 2026, FINRA filed a partial
amendment (``Amendment No. 1'') to the proposed rule change, to amend
language
[[Page 20732]]
regarding the timing of the implementation of the proposed rule
change.\8\ The Commission is publishing this notice to solicit comments
on Amendment No. 1 from interested persons and is approving the
proposed rule change, as modified by Amendment No. 1, on an accelerated
basis.
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\7\ See letter from Adam Arkel, Associate General Counsel,
Office of General Counsel, FINRA (Mar. 18, 2026) (``FINRA Letter''),
available at: https://www.sec.gov/comments/sr-finra-2025-017/srfinra2025017-729267-2273314.pdf.
\8\ See Amendment No. 1, available at: https://www.finra.org/sites/default/files/2026-04/FINRA-2025-017-Partial-A-1.pdf.
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II. Description of the Proposed Rule Change, as Modified by Amendment
No. 1
The proposed rule change would, among other things, eliminate
provisions relating to ``pattern day traders,'' the computation and use
of ``day-trading buying power,'' and the minimum equity requirement of
$25,000 for pattern day traders, and would implement instead new
intraday margin standards. Additionally, the proposed rule change would
update certain provisions in Rule 4210 in light of the proposed change
implementing intraday margin requirements and delete obsolete
references.
As such, the proposed rule change would eliminate paragraph
(f)(8)(B) under Rule 4210 together with associated provisions relating
to the day trading margin requirements under paragraphs (b), (f)(10)
and (g)(13), would establish new paragraphs (a)(17) through (a)(19),
new paragraph (d)(2) and new paragraphs (g)(1)(J) and (g)(1)(K), and
would make minor conforming amendments.\9\
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\9\ See Notice, 91 FR at 1580.
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A. Current Day Trading Margin Requirements of Rule 4210
FINRA Rule 4210 (Margin Requirements) establishes special
requirements for pattern day traders.\10\ The rule defines the term
``day trading,'' subject to specified exceptions, as the purchasing and
selling or the selling and purchasing of the same security on the same
day in a margin account.\11\ A ``pattern day trader'' means any
customer who executes four or more day trades within five business
days.\12\ A customer who is deemed a pattern day trader becomes subject
to the special requirements under paragraph (f)(8)(b)(iv) of Rule 4210
that apply to patten day traders. Minimum equity of $25,000 is required
for the account of the customer deemed to be a pattern day trader,
which must be deposited into the account before the customer may
continue day trading, and which must be maintained in the account at
all times.\13\
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\10\ See current FINRA Rule 4210(f)(8)(B). Associated provisions
are found in references to pattern day trader minimum equity
requirements in paragraph (b) of the rule, as well as paragraph
(g)(13), which addresses the conditions for applicability of the day
trading margin requirements in portfolio margin accounts, and
corresponding references to the day trading requirements under
paragraph (f)(10), which addresses security futures. See Notice, 91
FR at 1580, n.3.
\11\ See current FINRA Rule 4210(f)(8)(B)(i).
\12\ See current FINRA Rule 4210(f)(8)(B)(ii). A customer will
not be considered a pattern day trader if the number of day trades
is 6% or less of their total trades for a five business-day period.
\13\ See current FINRA Rule 4210(f)(8)(B)(iv)a.
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Further, the special requirements prohibit pattern day traders from
trading in excess of their ``day-trading buying power.'' \14\ When
pattern day traders exceed their day-trading buying power, that creates
a special maintenance margin deficiency, and the rule requires the
member to take several specified actions.\15\
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\14\ See current FINRA Rule 4210(f)(8)(B)(iv)c. FINRA Rule 4210
defines day-trading buyer power as the equity in a customer's
account at the close of business of the previous day, less any
maintenance margin requirement set forth in paragraph (c) of Rule
4210, multiplied by four for equity securities, or computed using
applicable special maintenance margin requirements pursuant to other
provisions of the rule for non-equity securities. See current FINRA
Rule 4210(f)(8)(B)(iii).
\15\ Specifically: the account must be margined based on the
cost of all the day trades made during the day; the customer's day-
trading buying power must be limited to the equity in the customer's
account at the close of business of the previous day, less the
maintenance margin required in paragraph (c) of Rule 4210,
multiplied by two for equity securities; and ``time and tick'' (that
is, calculating margin using each trade in the sequence that it is
executed, using the highest open position during the day) may not be
used. See current FINRA Rule 4210(f)(8)(B)(iv)c.1. through c.3. See
Notice, 91 FR 1581, n.9.
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If a pattern day trader fails to meet a special maintenance margin
call within five business days from the date the margin deficiency
occurs, they are permitted to execute transactions only on a cash
available basis for 90 days or until the special maintenance margin
call is met.\16\
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\16\ See current FINRA Rule 4210(8)(B)(iv)d.
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Pattern day traders are restricted from using the guaranteed
account provision pursuant to paragraph (f)(4) of Rule 4210 for meeting
the requirements of paragraph (f)(8)(B).\17\ Further, funds deposited
into a pattern day trader's account to meet the minimum equity or
maintenance margin requirements of paragraph (f)(8)(B) of the rule
cannot be withdrawn for a minimum of two business days following the
close of business on the day of deposit.\18\
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\17\ See current FINRA Rule 4210(f)(8)(B)(iv)e. Broadly,
paragraph (f)(4) of Rule 4210 permits an account guaranteed by
another account to be consolidated with that other account, for
purposes of margin, subject to specified conditions under the rule.
\18\ See current FINRA Rule 4210(f)(8)(B)(iv)f.
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Finally, in the event a customer does not meet a special margin
maintenance call by the fifth business day, then on the sixth business
day only, members are required to deduct from net capital the amount of
the unmet special margin maintenance call pursuant to the Commission's
net capital rule (Exchange Act Rule 15c3-1) and, if applicable, Rule
4110(a).\19\
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\19\ FINRA Rule 4110(a) is a component of FINRA's capital
compliance rules. See Notice, 91 FR at 1581.
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B. Proposed Amendments
Based on engagement with customers and members,\20\ FINRA proposed
to eliminate the current day trading margin requirements, including the
definition of ``day trading'' and ``pattern day trader,'' as well as
the computation and use of day-trading buying power, and the $25,000
minimum equity requirement \21\ and replace these provisions with new
intraday margin requirements. 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. FINRA believes that the proposed rule
change will benefit customers and members alike by reducing risks of
intraday trading exposures more broadly and giving customers more
freedom to participate in the markets, while reducing
[[Page 20733]]
compliance costs for members. FINRA stated that one of the primary
rationales for the current requirements--that commission costs would
seriously undermine returns when investors over-traded in their
accounts--is largely gone: customers today have the benefit of zero
commission trading.\22\
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\20\ See Notice, 91 FR at 1581-82 (describing adoption of day
trading requirements, developments in financial markets since the
adoption of the day trading requirements, and input from
retrospective review and industry outreach).
\21\ As such, FINRA stated that the proposed rule change would
delete paragraph (f)(8)(B) of FINRA Rule 4210 in its entirety. In
addition, the proposed rule change would delete, as rendered
obsolete, provisions elsewhere in FINRA Rule 4210 that refer to or
are premised upon the current day trading margin requirements,
including: in paragraph (b) the references to the pattern day trader
minimum equity requirement; paragraphs (f)(10)(G)(ii) and
(f)(10)(G)(iii) in their entirety, given those provisions are
premised on applying the current day trading margin requirements in
the context of security futures; and paragraph (g)(13) in its
entirety, given that provision is premised on specified conditions
for applicability of the current day trading margin requirements in
portfolio margin accounts. See Exhibit 5. All references to the
proposed rule text can be found in Exhibit 5, available at: https://www.sec.gov/files/rules/sro/finra/2026/34-104572-ex5.pdf. If the
proposed rule change is approved by the SEC, FINRA stated it would
also delete associated interpretations relating to the day trading
margin requirements that FINRA maintains on its website, FINRA.org.
These associated interpretations include: Interpretations/023,/025
and/034 under FINRA Rule 4210(b)(4); Interpretation/03 under Rule
4210(f)(5); Interpretations/01,/02 and/03 under FINRA Rule
4210(f)(8)(B)(ii); and all interpretations under FINRA Rule
4210(f)(8)(B) and FINRA Rule 4210(g)(13). See Notice, 91 FR at 1582,
n.24.
\22\ See Notice, 91 FR at 1582.
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In addition, by removing the current day trading margin
requirements, FINRA stated that more retail investors may choose to
participate in the markets and pursue their preferred trading
strategies. Further, FINRA believes customers should also find the
intraday margin approach significantly easier to understand than the
current day trading margin requirements. FINRA stated that members,
relieved of the burdens associated with enforcing outdated pattern day
trading requirements, should benefit from lower compliance costs, while
reducing risks of overextended trading. Finally, FINRA stated that it
anticipates that the new proposed requirements, by requiring
appropriate margin for intraday risk created by day trades and other
intraday activity, such as transactions in options on their expiration
dates (``zero day to expiration'' or ``0DTE'' options trading), will be
effective in avoiding the build-up of unmargined positions that could
hurt both customers and members during large shifts in market
prices.\23\
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\23\ See Notice, 91 FR at 1582.
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FINRA stated that the proposed rule change makes no change to the
regular maintenance margin requirements as they exist today.\24\
Rather, the proposed rule change supplements these existing maintenance
margin requirements.
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\24\ The maintenance margin requirements are set forth under
current paragraph (c) of FINRA Rule 4210.
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FINRA stated that the key features of the proposed intraday margin
provisions include:
Members would be empowered to use real-time monitoring to
block trades that would create or increase customer intraday margin
deficits;
Alternatively, members could, at the end of the day,
compute each customer's intraday margin deficit, which, for customers
that are not day trading or opening option positions on their
expiration date, is comparable to their regular maintenance deficits;
When an account has an intraday margin deficit, the member
would require the intraday deficit to be satisfied as promptly as
possible, by deposits to the account or liquidations of positions to
increase the maintenance margin excess;
If an intraday margin deficit is not satisfied within five
business days, the member would be required to deduct the deficit in
its net capital computations (for up to ten business days). If the
customer makes a practice of failing to satisfy intraday margin
deficits promptly, the member would be required to ``freeze'' the
customer from obtaining additional extensions of credit until the
deficit is satisfied (or 90 days elapse).\25\
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\25\ See Notice, 91 FR at 1582.
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The proposed changes are described in detail below.
1. Requirement To Determine Intraday Margin
FINRA proposed to establish a new paragraph (d)(2) (``Intraday
Margin'') under Rule 4210.\26\ The core, operative provision would be
set forth in paragraph (d)(2)(A), which establishes the requirement on
each member to determine the ``intraday margin deficit'' \27\ for each
margin account of a customer, as further specified in the rule.
Paragraph (d)(2)(B) sets parameters for purposes of making the required
determination. Paragraphs (d)(2)(C) and (d)(2)(D) govern the
satisfaction of an intraday margin deficit and set forth the provisions
for a specified 90 day freeze in the event of failure to satisfy a
deficit. FINRA stated that the requirements of new paragraph (d)(2) are
designed so that members could comply with the rule by implementing
real-time monitoring of customer positions and blocking transactions
that would otherwise create or increase intraday margin deficits.\28\
As a result, these members' customers should never incur intraday
margin deficits.
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\26\ The provisions under current paragraph (d) would be
redesignated, without material change, as paragraph (d)(1), under a
new header (``House Margin and Limits''), which FINRA stated it
believes is appropriate to the subject matter and function of that
paragraph. See Notice, 91 FR at 1582, n.26.
\27\ See further discussion below for the proposed definition of
``intraday margin deficit.''
\28\ See Notice, 91 FR at 1582-83.
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FINRA stated, however, that real-time monitoring is not a
requirement under the rule and that members would be permitted,
alternatively, to continue to make a single margin calculation at the
end of the day, rather than throughout the day, as they do under the
current requirements.\29\ FINRA expects that, for customers that do not
day trade or do not open option positions on their expiration date, the
end of day intraday margin computation should not be more burdensome
than the regular maintenance margin computation because their intraday
margin deficits should not exceed their regular maintenance deficits.
FINRA stated that it believes this approach would be effective because,
whether the member implements real-time monitoring, or conducts end-of-
day computations, the rule is designed to result in an effective,
disciplined approach to margin.\30\ FINRA described the elements of
proposed paragraphs (d)(2)(A) and (d)(2)(B).\31\
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\29\ See Notice, 91 FR at 1583.
\30\ See Notice, 91 FR at 1583.
\31\ See Notice, 91 FR at 1583-84.
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Proposed paragraph (d)(2)(A) would establish the requirement that
each FINRA member firm determine the ``intraday margin deficit,'' if
any, for each margin account of a customer, other than a good faith
account or a portfolio margin account, and for each day in which there
is any ``IML-reducing transaction.'' \32\ In order to implement this
core requirement, FINRA proposed to adopt several new key terms:
``intraday margin level; ``IML-reducing transaction''; and ``intraday
margin deficit.''
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\32\ See proposed FINRA Rule 4210(d)(2)(A). See also Notice, 91
FR at 1583.
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First, the term ``intraday margin level'' (or ``IML'') under new
paragraph (a)(17) would mean, with respect to a customer's margin
account for a time or IML-reducing transaction in such margin account
during a day, either: (A) the amount of cash that the customer could
withdraw while still having the maintenance margin required by the
provisions of FINRA Rule 4210 other than FINRA Rule 4210(d)(2); or (B)
the amount of additional cash (expressed as a negative number) that the
customer would need to deposit into such margin account for it to have
the maintenance margin required by the provisions of Rule 4210 other
than Rule 4210(d)(2), in each case (that, is (A) or (B)) determined as
of such time or immediately after such IML-reducing transaction in
accordance with Rule 4210(d)(2)(B).\33\
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\33\ See proposed FINRA Rule 4210(a)(17). See also Notice, 91 FR
at 1583.
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Second, the term ``IML-reducing transaction'' under new paragraph
(a)(18) would refer, broadly, to any transaction that reduces the
amount available to a customer to withdraw while still meeting the
maintenance margin requirement (for example, the purchase of a stock
other than to cover a short position or the short sale of an
option).\34\
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\34\ See proposed FINRA Rule 4210(a)(18). Paragraph (a)(18)
would define ``IML-reducing transaction'' to mean ``with respect to
a margin account, any purchase or sale effected in such account
(including as the result of the exercise or assignment of an option)
that has the effect of reducing the account's IML, the expiration of
any option long in the account that has the effect of reducing the
account's IML, and any withdrawal of cash or securities from such
account.'' See also Notice, 91 FR at 1583.
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[[Page 20734]]
Lastly, FINRA stated that the term ``intraday margin deficit''
would be defined under new paragraph (a)(19) to refer, broadly, to the
highest deficiency following an ``IML-reducing transaction'' between
the margin to be maintained and the equity in the account.\35\
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\35\ See proposed FINRA Rule 4210(a)(19). Specifically,
``intraday margin deficit'' would be defined to mean ``with respect
to a margin account for a day in which there is any IML-reducing
transaction in such account, an amount determined in accordance with
FINRA Rule 4210(d)(2)(B) by the member maintaining such account that
is not less than the absolute value of the largest negative IML (if
any) with respect to any IML-reducing transaction in such margin
account during such day.'' See also Notice, 91 FR at 1583.
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2. Parameters for Determining IML or Intraday Margin Deficit
In addition to the core requirement and proposed defined terms,
FINRA also proposed paragraph (d)(2)(B) to establish certain parameters
for member firms to take into account when determining an IML or
intraday margin deficit.\36\
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\36\ See also Notice, 91 FR at 1583.
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Pursuant to the proposed amendments:
(a) Sweep Programs. Members would be permitted to follow a written
policy or procedure to treat a customer's deposits at FDIC-insured
banks under a Sweep Program,\37\ operated by the member, as a credit
balance in the customer's account for this purpose; \38\
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\37\ See the provisions under Exchange Act Rule 15c3-3(j)
governing ``Sweep Programs'' as defined under Exchange Act Rule
15c3-3(a)(17).
\38\ See proposed FINRA Rule 4210(d)(2)(B)(i). FINRA noted
members would be able to apply such treatment regardless of whether
the customer does any day trading. See Notice, 91 FR at 1583.
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(b) Market Value. Members would be permitted to follow a written
policy or procedure to use values more recent than the execution price
or the previous business day's closing price to determine the current
market value of a position, provided that such procedure is reasonably
designed; \39\ and
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\39\ See proposed FINRA Rule 4210(d)(2)(B)(ii). FINRA noted, for
example, a member that makes a single end of day calculation of its
customers' intraday margin deficits could utilize the same end of
day prices for that calculation as it uses for determining whether
the customer has a maintenance margin deficiency as the end of the
day See also Notice, 91 FR at 1583.
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(c) ``As of'' actions. Members would be permitted to follow a
written policy or procedure to allocate ``as of'' actions either to the
approximate time and day during which they are processed or to the
earlier time or day recorded for their occurrence, provided that such
procedure is reasonably designed; \40\
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\40\ See proposed FINRA Rule 4210(d)(2)(B)(iii). See also
Notice, 91 FR at 1583.
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(d) Treatment of deposits and withdrawals. Further, member firms
would be permitted to treat all deposits and withdrawals of cash or
securities into or from a margin account during the day as occurring
simultaneously and immediately after the beginning of the day,
notwithstanding the time of occurrence. The same would be permitted for
any transaction that closes a position that was open at the beginning
of the day. FINRA stated this allows net deposits, and margin released
by closing positions existing at the end of the day, to reduce or
eliminate intraday margin deficits that otherwise would have occurred
as a result of activity before the deposits or liquidations took
place.\41\
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\41\ See proposed FINRA Rule 4210(d)(2)(B)(iii). See also
Notice, 91 FR at 1583.
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(e) Multiple legs of a spread and options exercised and liquidated
on the same day. Member firms would also be able to treat as occurring
simultaneously:
(1) the execution of multiple legs of a spread as a result of a
single order submission or otherwise substantially contemporaneously;
\42\ or
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\42\ See proposed FINRA Rule 4210(d)(2)(B)(v)a. See also Notice,
91 FR at 1583.
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(2) the creation of a position by the assignment or exercise of an
option and the liquidation of such position during the same day.\43\
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\43\ See proposed FINRA Rule 4210(d)(2)(B)(v)b. See also Notice,
91 FR at 1583-84.
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(f) Computing IML. FINRA proposed, for purposes of paragraph
(d)(2)(B) of FINRA Rule 4210, if two or more activities in a margin
account occurred during a day and the member cannot demonstrate that
one activity occurred before another activity, then the IML with
respect to such activities must be computed on the assumption that the
activities occurred in an order that results in the highest intraday
margin deficit for such day.\44\
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\44\ See proposed FINRA Rule 4210(d)(2)(B)(vi). See also Notice,
91 FR at 1584.
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3. Satisfaction of Intraday Margin Deficits and 90-Day Freeze
To promote a disciplined approach to intraday margin, FINRA
proposed paragraphs (d)(2)(C) and (d)(2)(D) of FINRA Rule 4210 that
would establish specified timeframes for the satisfaction of intraday
margin deficits, and requirement to freeze an account where a customer
makes a practice of failing to satisfy intraday margin deficits as
promptly as possible.
First, FINRA proposed new paragraph (d)(2)(C) which includes three
core provisions. The first provision would require intraday margin
deficits to be satisfied as promptly as possible if a margin account
(other than a good faith account or a portfolio margin account) has an
intraday margin deficit with respect to a day in which there is an IML-
reducing transaction in such account.\45\ Second, FINRA proposed that
an intraday margin deficit for a day would be ``satisfied'' for
purposes of the rule if, from the end of such day to the end of a
subsequent day, the customer made net deposits, or otherwise caused an
increase in the account's IML, sufficient to equal the intraday margin
deficit. The rule would provide that net deposits or increases in IMLs
may satisfy multiple outstanding intraday margin deficits for the same
margin account.\46\ Third, FINRA proposed that an intraday margin
deficit would remain outstanding until satisfied or until immediately
after the close of business on the fifteenth business day after the
date of the intraday margin deficit.\47\
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\45\ See proposed FINRA Rule 4210(d)(2)(C)(i). See also Notice,
91 FR at 1584.
\46\ See proposed FINRA Rule 4210(d)(2)(C)(ii). See also Notice,
91 FR at 1584.
\47\ See proposed FINRA Rule 4210(d)(2)(C)(iii). See also
Notice, 91 FR at 1584.
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Under proposed new paragraph (d)(2)(D), FINRA proposed that if a
customer makes a practice of failing to satisfy intraday margin
deficits as promptly as possible, and fails to satisfy an intraday
margin deficit by the close of business on the fifth business day after
it occurs, the member firm must enforce written policies and procedures
reasonably designed to prevent the customer from creating or increasing
a short position or a debit balance (other than by closing a short
position) for 90 calendar days after such fifth business day or until
the intraday margin deficit has been satisfied (without regard to its
expiration pursuant to proposed Rule 4210(d)(2)(C)(iii)).\48\ The
proposed amendment would provide that a customer shall not be
considered to be making a practice of failing to satisfy intraday
margin deficits as promptly as possible due to intraday margin deficits
that:
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\48\ See proposed FINRA Rule 4210(d)(2)(D). See also Notice, 91
FR at 1584.
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(i) Do not exceed the lesser of 5% of the equity in the margin
account or $1,000; or
(ii) Are reasonably determined by the member to have occurred under
extraordinary circumstances such that failures to satisfy such intraday
margin deficits do not reflect a practice of failing to satisfy
intraday margin deficits as promptly as possible.\49\
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\49\ See proposed FINRA Rule 4210(d)(2)(D)(i)-(ii). See also
Notice, 91 FR at 1584.
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[[Page 20735]]
4. Portfolio Margin Amendments
The proposed rule change would update provisions of paragraph (g)
of FINRA Rule 4210 with respect to portfolio margin. Specifically,
because the proposed rule change would render obsolete references under
FINRA Rule 4210 that are premised on specified conditions for the
applicability of the current day trading margin requirements, FINRA
proposed to delete paragraph (g)(13).\50\
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\50\ See also Notice, 91 FR at 1584.
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In lieu of paragraph (g)(13), the proposed rule change would
establish new paragraphs (g)(1)(J) and (g)(1)(K) of FINRA Rule 4210,
which would provide that, among the other monitoring provisions for
portfolio margin, a member, in performing the risk analysis of
portfolio margin accounts required by the rule, would need to include
in the written risk analysis methodology procedures and guidelines for:
(1) determining and monitoring intraday risk created by activity in
each portfolio margin account; and (2) requiring each portfolio margin
account that maintains less than $5 million in equity to maintain
margin for intraday risk that is substantially similar to the margin
required for positions existing at the end of the day.\51\ FINRA stated
it believes this approach, which preserves the $5 million threshold
that currently applies, is well understood by industry participants and
appropriate given the nature of portfolio margin activity.\52\
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\51\ See proposed FINRA Rules 4210(g)(1)(J) and (K). See also
Notice, 91 FR at 1584.
\52\ See Notice, 91 FR at 1584.
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C. Implementation and Amendment No. 1
FINRA stated that if the Commission approves the proposed changes,
FINRA would announce the effective date in a Regulatory Notice. Noting
that member firms may need adequate time to prepare to implement the
new requirements, while others may be able to implement them more
quickly, FINRA stated that members should be provided with an interim
period in which they may continue applying the current day trading
margin requirements as appropriate (e.g., by account) while preparing
to implement the new requirements.\53\ FINRA also stated that it
believes that member firms that prefer to implement the new
requirements more quickly should be allowed to do so prior to the
expiration of this interim period. Consequently, FINRA anticipated that
the interim period would be for 12 months after FINRA announces the
effective date of the proposed rule change in a Regulatory Notice.
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\53\ See Notice, 91 FR at 1584.
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On April 2, 2026, FINRA filed Amendment No. 1 to the proposed rule
change.\54\ Amendment No. 1 revised language in the Notice regarding
the implementation date of the proposed rule change to provide that if
the Commission approves the proposal, FINRA 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 of
the Regulatory Notice. Amendment No. 1 also made certain non-
substantive edits to the same paragraph in the Notice.\55\
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\54\ See Amendment No. 1.
\55\ See id. See also section III.C. of this order (discussing
FINRA's response to comments received regarding the proposed
implementation period and the Commission's findings with respect to
FINRA's revised implementation proposal, as set forth in Amendment
No. 1).
---------------------------------------------------------------------------
Finally, FINRA stated that to aid members in preparing for
implementation of the proposed rule change, FINRA will make available
on its website training materials, illustrative examples and other
guidance as appropriate regarding the application of intraday
margin.\56\
---------------------------------------------------------------------------
\56\ See Notice, 91 FR at 1584.
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III. Discussion and Commission Findings
After careful review of the proposed rule change, as modified by
Amendment No. 1, comment letters, and FINRA's responses to the
comments, the Commission finds that the proposed rule change is
consistent with the requirements of the Exchange Act and the rules and
regulations thereunder applicable to a national securities
association.\57\ Specifically, for the reasons discussed below, the
Commission finds that the proposed rule change is consistent with
Section 15A(b)(6) of the Exchange Act,\58\ which requires, among other
things, that FINRA rules be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in facilitating transactions in securities, to remove
impediments to and perfect the mechanism of a free and open market and,
in general, to protect investors and the public interest.
---------------------------------------------------------------------------
\57\ In approving this rule change, the Commission has
considered the rule's impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\58\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------
A. New Intraday Margin Requirements
As stated in section I. above, the Commission received comments to
the Notice.\59\ Most commenters, including individual investors,\60\
overwhelmingly supported the proposal to replace the current day
trading margin requirements with the proposed intraday margin
requirements, including elimination of the $25,000 minimum equity
requirements and definition of pattern day trader.\61\ Commenters
supported the
[[Page 20736]]
elimination of the $25,000 minimum equity stating that it favors
wealthier investors and creates an arbitrary barrier for smaller
investors.\62\ Commenters stated that the proposed intraday margin
requirements rather than arbitrary thresholds (e.g., $25,000 equity
requirement) would be a more effective way to align trading activity
with risk exposure in real-time and better enable retail traders to
manage their actual risk.\63\ Other commenters stated that individual
day traders play an important role in the markets, and that the new
intraday requirements will provide equal opportunity for retail
participants, while still maintaining appropriate safeguards.\64\
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\59\ See Comment File.
\60\ See, e.g., Letters from Roger Allen (Feb. 6, 2026); Angel
Anderson (Jan. 28, 2026 and Jan. 31, 2026); Thomas Androxman (Feb.
17, 2026); Thomas Berk (Mar. 10, 2026) (``Berk Letter''); Chao (Jan.
30, 2026) (``Chao Letter''), Charles A (Jan. 15, 2026); Ethan Chia
(various letters) (``Chia Letter''); Monica Cutsforth-Balele (Feb.
13, 2026) (``Cutsforth Letter''); Cenk Darendeli (Feb. 16, 2026)
(``Darendeli Letter''); David (Jan. 28, 2026); Katherine Diamond
(Mar. 2, 2026) (``Diamond Letter''); Treavor Anthony English (Jan.
15, 2026) (``English Letter''); Findley Flanagan (Jan. 11, 2026)
(``Flanagan Letter''); Ernest F. Fleming, Jr. (Mar. 2, 2026)
(``Fleming Letter''); Teri Gonzales (Jan. 12, 2026); Moshe Grama
(Jan. 31, 2026) (``Grama Letter''); Russell Grove (Jan. 27, 2026)
(``Grove Letter''); Frieda Gail Hedglin (Jan. 22, 2026); Abi
Hernandez (Jan. 13, 2026); Randy Lee Hockenberry (Jan. 14, 2026)
(``Hockenberry Letter''); Wade Horner (Feb. 24, 2026) (``Horner
Letter''); Alecia Johnson (Jan. 25, 2025) (A. Johnson Letter''); J.
Johnson (Jan. 29, 2026); Michael Kramer (Jan. 28, 2026 and Feb. 5,
2026) (``Kramer Letter''); Steven Lee (Jan. 23, 2026); Roberto Lopez
(Jan. 22, 2026); Caleb Miner (Feb. 2, 2026); William Minerich (Jan.
27, 2026); Terry Monroe (Jan. 15, 2026); Joseph Morrell (Jan. 16,
2026); Christopher Murrow (Mar. 8, 2026) (``Murrow Letter''); Wanson
Ng (Feb. 27, 2026) (``Ng Letter''); Warren Odom (Feb. 26, 2026);
Daniel Pardo (Jan. 16, 2026) (``Pardo Letter''); Sagar Paudel (Feb.
2, 2026) (``Paudel Letter''); Karmic Pretizas (Mar. 16, 2026)
(``Pretizas Letter''); M.E. Raatz (Jan. 12, 2026); Jonathan Rimdzius
(Feb. 4, 2026) (``Rimdzius Letter''); Christopher Rodriguez (Feb. 5,
2026); Kyle Sandvold (Jan. 16, 2026) (``Sandvold Letter'');
Alexander Ski (Jan. 12, 2026) (``Ski Letter''); James A. Steward
(Feb. 2, 2026); J.W. Sung (Jan. 13, 2026); Swag City (Jan. 24,
2026); Tim Taylor (Jan. 27, 2026); James Walker (Feb. 3, 2026);
James D.B. Williams (Feb. 4, 2026) (``Williams Letter'').
\61\ See, e.g., Letters from Kevin Skarbek, Chairman of the
Board and James Toes, President & CEO, Security Traders Association
(Feb. 20, 2026) (``STA Letter''); Jake Chupick, SVP, Active Trading,
Lightspeed Financial Services Group, LLC (Feb. 19, 2026)
(``Lightspeed Letter''); Patrick Sexton EVP, General Counsel, and
Corporate Secretary, Cboe Global Markets, Inc. (Feb. 17, 2026)
(``Cboe Letter''); Faris Matalka, Managing Director, Trading and
Margin Services, Charles Schwab & Co., Inc. (Feb. 12, 2026)
(``Schwab Letter''); Katie Kolchin, CFA, Managing Director, Head of
Equity & Options Market Structure, and Joseph Corcoran, Managing
Director & Associate General Counsel, SIFMA (Feb. 6, 2026) (``SIFMA
Letter''); Edward Nasti, Vice President, Head of Legal, Alpaca
Securities, LLC (Feb. 4, 2026) (``Alpaca Letter''); Matt Billings,
President, Robinhood Financial LLC and Robinhood Securities, LLC,
(Feb. 4, 2026) (``Robinhood Letter''); Nicolas Morgan, President,
Investor Choice Advocates Network (Feb. 4, 2026) (``ICAN Letter'');
Jennifer Nayar, Chief Executive Officer, Sterling Trading Tech (Jan.
15, 2026) (``Sterling Letter'').
\62\ See STA Letter; Cboe Letter; ICAN Letter; Pretizas Letter;
Berk Letter; Fleming Letter; Williams Letter; Pardo Letter; Sandvold
Letter; English Letter; Hockenberry Letter; Letter from Gerald J.
Driver (Jan. 13, 2026); Letter from Tom Edic (Jan. 12, 2026);
Flanagan Letter.
\63\ See Ng Letter.
\64\ See Murrow Letter; Paudel Letter; Schwab Letter.
---------------------------------------------------------------------------
Commenters also stated that the current day trading requirements
may prevent retail investors from exiting losing positions or force
them to stay in disadvantageous ones to prevent themselves from being
designated a pattern day trader.\65\ As such, commenters stated that
these requirements subject day traders to higher risk and the potential
for financial harm.\66\ Another commenter stated that the existing
requirements are difficult for investors to comprehend and operate
unfairly in practice, resulting in frequent investor complaints.\67\
Other commenters stated that aligning margin requirements with actual
intraday exposure would result in better and more efficient customer
margining, and promote capital efficiency, fairness, and stability
while maintaining appropriate safeguards against excessive
leverage.\68\
---------------------------------------------------------------------------
\65\ See Diamond Letter; Rimdzius Letter; Ski Letter.
\66\ See Cutsforth Letter; Grama Letter; Chao Letter; Grove
Letter.
\67\ See Robinhood Letter.
\68\ See Horner Letter; Lightspeed Letter; SIFMA Letter.
---------------------------------------------------------------------------
Commenters stated that significant technological advances since the
adoption of FINRA Rule 4210 have enabled firms to implement robust,
real-time risk management systems capable of assessing intraday risk
and client balances dynamically.\69\ A commenter also stated that
technological advancements such as low-cost trading apps, real-time
market data, and educational resources, which were previously available
only to professional traders or those with significant capital lowered
the barrier to entry making it possible for a broader demographic of
investors to engage with the financial markets with minimal
capital.\70\ Another commenter stated that the proposal appropriately
focuses on the practical risk concern that matters most in today's fast
markets--the risk of intraday maintenance margin shortfalls at the time
exposure is created, rather than the customer's day trade count or a
prior day-trading buying power snapshot.\71\
---------------------------------------------------------------------------
\69\ See STA Letter; Cboe Letter.
\70\ See STA Letter.
\71\ See Alpaca Letter.
---------------------------------------------------------------------------
Commenters stated that implementing the intraday margin approach
should also be easier for customers to understand, which will reduce
confusion and the likelihood of complaints, and will reduce ``firm
hopping'' that occurs if a customer is designated a ``pattern day
trader.'' \72\ Another commenter stated that the proposal maintains
strong safeguards because firms would still be required to monitor
accounts continuously, restrict activity when intraday deficits arise,
and impose consequences for repeated failures to meet margin
obligations. The commenter stated that this ensures investor protection
without unnecessarily limiting market participation.\73\
---------------------------------------------------------------------------
\72\ See Robinhood Letter; A. Johnson Letter.
\73\ See Letter from Justin Bentley Letter (Jan. 24, 2026).
---------------------------------------------------------------------------
One commenter supported FINRA's decision to structure the proposal
so that member firms may comply by either implementing real-time
controls to prevent intraday margin deficits from arising or by using a
single end-of-day computation.\74\ Commenters stated that this
flexibility encourages continued industry modernization without
prescribing specific technologies or implementation paths and
accommodates diverse business models and systems, while requiring
prompt satisfaction of identified deficits and meaningful consequences
for repeated failures, resulting in a more coherent framework for
intraday risk.\75\
---------------------------------------------------------------------------
\74\ See Alpaca Letter.
\75\ See Alpaca Letter; Sterling Letter.
---------------------------------------------------------------------------
One commenter stated that while targeted revisions may be in order,
FINRA has not made the case for wholesale changes to the day trading
margin requirements without adequate justification and that many of the
risks and concerns that originally led to the adoption of the day
trading rules exist today.\76\ The commenter stated that zero
commission trading platforms may pose harm to small, less experience
retail investors, the ``finfluencers'' on social media platforms have
proliferated and are encouraging risk taking and speculation, and that
entry of younger investors into the markets with higher risk appetites
bolsters the need for strong day trading rules.\77\ The commenter
stated it would be inappropriate for FINRA to remove or dilute
important regulatory guardrails without assurance that firms will
manage day trading risks.\78\ This commenter also stated that
permitting members to use real-time monitoring or an end-of-day
calculation would give firms too much discretion.\79\ Finally, this
commenter stated that FINRA did not seek adequate notice and comment on
the proposal, that FINRA's retrospective review of the day trading
requirements in Regulatory Notice 24-13 was insufficient, and that
FINRA should collect more empirical evidence.\80\
---------------------------------------------------------------------------
\76\ See Letter from Marni Rock Gibson, NASAA President and
Commissioner, Kentucky Department of Financial Institutions, North
American Securities Administration Association (Feb. 4, 2026)
(``NASAA Letter'').
\77\ See NASAA Letter.
\78\ See NASAA Letter.
\79\ See NASAA Letter.
\80\ See NASAA Letter.
---------------------------------------------------------------------------
In response to the comments raising concerns about the elimination
of the current day trading requirements, FINRA agreed with the
commenter about the importance of margin as a regulatory guardrail.\81\
FINRA stated that the proposal does not eliminate margin, but replaces
the outdated day trading margin requirements with modern effective
standards that recognize the significant advances in market technology
since the time when day trading margin rules were adopted. FINRA stated
that real-time monitoring of intraday risk is something that firms are
already doing.\82\ FINRA stated that the claim that FINRA does not have
adequate justification of the rule changes minimizes the changes in
modern markets and the needs of today's investors, as many expressed in
comments to the proposal.\83\ FINRA also highlighted that other
commenters disagreed with the statements in the commenter's letter by
stating that they were frustrated with the commenter's portrayal of
retail investors, believed the insistence on maintaining the $25,000
minimum equity is a discriminatory type of wealth test, and stated that
the proposed rule change is quite obviously
[[Page 20737]]
before the Commission for public comment.\84\
---------------------------------------------------------------------------
\81\ See FINRA Letter.
\82\ See FINRA Letter.
\83\ See FINRA Letter.
\84\ See FINRA Letter. See also Chia Letter (Feb. 7, 2026) and
Kramer Letter (Feb. 5, 2026).
---------------------------------------------------------------------------
In addition, FINRA stated that it does not share the commenter's
view that a retrospective review cannot provide a sufficient foundation
from which to put forward a proposed rule change.\85\ FINRA stated, as
discussed in the proposal, that it received broad input in response to
the retrospective review, and engaged in extensive outreach, the tenor
of which reflected strong value in moving to an intraday margin
rule.\86\ FINRA stated it disagrees with the commenter that the
proposal dilutes margin and that it is problematic for FINRA to permit
flexibility as to the methods members use to implement the
requirements.\87\ FINRA also stated that it has been clear that margin
determinations are a matter of the objective definitions and parameters
set forth in the proposal, and members will be expected to act
consistently with those standards.\88\
---------------------------------------------------------------------------
\85\ See FINRA Letter.
\86\ See FINRA Letter; see also Notice, 91 FR at 1581-82.
\87\ See FINRA Letter.
\88\ See FINRA Letter.
---------------------------------------------------------------------------
The proposed rule change modernizes current day trading margin
requirements to alleviate unnecessary burdens on broker-dealers and
customers, while continuing to address the risks of intraday trading
exposures. Additionally, the requirement that a broker-dealer collect
the largest intraday margin deficit from customers will ensure
customers maintain equity in their margin accounts aligned with the
amount of market exposure they have at any point in a trading day,
whether they day trade or not. This intraday margin requirement will
address the risks of intraday margin exposures without diminishing the
protections of the current day trading requirements that require
customers to post additional margin related to intraday trading to
supplement regular maintenance margin requirements under FINRA Rule
4210.\89\
---------------------------------------------------------------------------
\89\ See current FINRA Rule 4210(f)(8).
---------------------------------------------------------------------------
The proposed rule will provide broker-dealers flexibility in
determining the intraday margin deficit on a day in which there is an
IML-reducing transaction, and provides certain parameters a broker-
dealer may follow in determining the intraday margin deficit.\90\ This
flexibility reflects advances in technology and risk management since
the adoption of the day trading margin requirements. Broker-dealers may
use real-time monitoring to block trades that would create or increase
a customer's intraday margin deficits. Alternatively, the proposed rule
permits a broker-dealer to compute a customer's intraday margin deficit
at the end of the day.\91\ This flexibility recognizes that broker-
dealers have diverse business models and serve a range of customers,
from large retail broker-dealers with many day trading accounts to
broker-dealers with primarily wealth management clients who rarely
engage in day trading.
---------------------------------------------------------------------------
\90\ See proposed FINRA Rule 4210(d)(2)(A) and (B).
\91\ See Notice, 91 FR at 1582.
---------------------------------------------------------------------------
While the new intraday margin requirements provide flexibility to
broker-dealers, the proposed rule's requirements tie the computation of
a customer's intraday margin deficit to the current maintenance margin
requirements under Rule 4210 (through the definition of intraday margin
level or IML).\92\ As a result, the proposed rule allows broker-dealers
to determine intraday margin deficits in the most effective way for
their specific business model or customer base, while requiring
computations based on existing maintenance margin requirements.\93\
This requirement will promote consistent margin practices among FINRA
broker-dealer members and mitigate risks that broker-dealers compete by
implementing lower intraday margin standards.
---------------------------------------------------------------------------
\92\ See proposed FINRA Rule 4210(a)(17) (defining the term
``IML'' or ``intraday margin level'' which is tied to the
maintenance margin requirements under Rule 4210 (other than
paragraph (d)(2)).
\93\ Id.
---------------------------------------------------------------------------
Further, the new intraday margin requirement will enhance market
access allowing increased investor participation in the securities
markets and facilitating capital formation. More specifically, removing
the $25,000 minimum equity requirement for accounts of customers deemed
pattern day traders \94\ will enhance access to the securities markets
by eliminating financial barriers for individuals with limited capital.
Therefore, the new intraday margin requirements will permit more
investors to participate in the securities markets and pursue their
chosen trading strategies while maintaining safeguards for broker-
dealers and investors against the current risks of intraday trading
exposures. Additionally, customers of FINRA member broker-dealers
remain subject to current initial and regular maintenance margin
requirements under FINRA Rule 4210.\95\ This promotes fair, orderly and
efficient markets by requiring uniform initial and maintenance margin
requirements for customers of FINRA members under Rule 4210 regardless
of whether they engage in day trading.
---------------------------------------------------------------------------
\94\ See current FINRA Rule 4210(f)(8)(B)(iv)a.
\95\ For example, the minimum initial margin requirement for the
purpose of effecting new securities transactions under current FINRA
Rule 4210 is the greater of certain requirements, including the
$2,000 minimum equity requirement or the initial margin requirements
under the Federal Reserve Board's Regulation T (12 CFR 220.1, et
seq.). See current FINRA Rule 4210(b)(1) through (4).
---------------------------------------------------------------------------
Removing the $25,000 minimum equity rule and other day trading
requirements--such as defining ``pattern day trader'' (generally any
customer who executes four or more day trades within five business
days) \96\ and standards for ``day-trading buying power'' \97\--will
ease regulatory burdens, reduce customer confusion, and lower
compliance costs. The new intraday margin rules should be easier for
customers to understand, as they no longer depend on counting trades
over several days to determine pattern day trader status or require
customers to monitor their day-trading buying power. Further,
eliminating the definition of pattern day trader may reduce customers'
potential losses, as they no longer will need to base trade decisions
on whether they will fall within that designation. This streamlining of
the day trading margin requirements to address intraday margin
exposures may decrease compliance costs for broker-dealers because
customer complaints may be reduced, and the rule will no longer require
broker-dealers to track a customer's day trades or compute day-trading
buying power. Consequently, the new intraday margin requirements will
enable broker-dealers to compute intraday margin requirements more
efficiently and reduce burdens for customers, while continuing to
protect investors by addressing the risks of intraday margin exposures.
---------------------------------------------------------------------------
\96\ See current FINRA Rule 4210(f)(8)(B)(ii).
\97\ See current FINRA Rule 4210(f)(8)(B)(iii).
---------------------------------------------------------------------------
In response to the commenter that supported targeted changes to the
current day trading margin requirements, but stated that FINRA did not
make a case for wholesale changes to the rule because of the risks that
retail traders continue to face,\98\ the Commission agrees with FINRA
that the proposal does not eliminate margin but replaces outdated day
trading margin requirements with modern, effective standards that
recognize the significant advances in market technology since the day
trading rules were originally adopted.\99\ Technological advances such
as app-based trading platforms, increased availability of information,
[[Page 20738]]
and influence of social media do not mitigate the risk inherent in day
trading or the fact the using margin may amplify those risks. The new
intraday margin requirements, however, continue to address the risks of
intraday exposures present in a day trading strategy, as well as
intraday exposure risks in customer margin accounts, while eliminating
outdated requirements that are a burden on both customers and broker-
dealers. In addition, the new intraday margin requirements will address
gaps in the current day trading requirements by covering the use of
intraday leverage through intraday margin requirements that will
include trading in 0DTE that the current day trading requirements do
not consider.\100\ Therefore, the new intraday margin requirement
retains the protections of the current rule in requiring customers to
post additional margin to cover intraday leverage to supplement regular
maintenance margin requirements without diminishing investor
protection. Further, the rule will limit a customer's (including a
customer with limited equity) ability to create or increase a short
position or debit balance (other than by closing a short position) for
a specified time period if an intraday margin deficit has not been
satisfied under the requirements of the rule.\101\
---------------------------------------------------------------------------
\98\ See NASAA Letter.
\99\ See FINRA Letter.
\100\ See Notice, 91 FR at 1582. The current day trading
requirements do not consider 0DTE trades because a day trade is
defined as the purchasing and selling or the selling and purchasing
of the same security on the same day in a margin account (with
certain exceptions). See current FINRA Rule 4210(f)(8)(B)(i).
\101\ See proposed FINRA Rule 4210(d)(2)(D).
---------------------------------------------------------------------------
Moreover, in addition to the new intraday margin requirements,
other existing margin requirements will continue to require that
broker-dealers ensure that customers maintain sufficient equity in
their margin accounts. As stated in the Notice, the intraday margin
requirements will supplement the existing maintenance margin
requirements under Rule 4210.\102\ Further, other existing requirements
under Rule 4210 also safeguard broker-dealers from the risks of
intraday exposures. For example, broker-dealers may always collect
additional margin from customers than required under Rule 4210 under
their ``house'' margin requirements.\103\ Existing requirements in Rule
4210 also require broker-dealers to have procedures to review the need
for instituting higher margin requirements, mark-to-markets and
collateral deposits than are required by Rule 4210 for individual
securities or customer accounts.\104\ Consequently, the new intraday
margin requirements and existing requirements under Rule 4210 will
protect broker-dealers and customers against the risks of intraday
exposures and the build-up of unmargined positions intraday, while
eliminating the outdated and burdensome provisions of the current day
trading requirements.
---------------------------------------------------------------------------
\102\ See e.g., current FINRA Rule 4210(c) and Notice, 91 FR at
1584.
\103\ See proposed FINRA Rule 4210(d)(1)(B). This existing
paragraph was renumbered in the proposal to account for the new
intraday margin requirements under proposed paragraph (d)(2) of Rule
4210. See Notice, 91 FR at 1582, at n.26.
\104\ See proposed FINRA Rule 4210(d)(1)(C).
---------------------------------------------------------------------------
In addition, in response to the comment that FINRA seeks regulatory
approval without adequate notice and comment because it did not seek
public comment on the notice before filing it with the Commission,\105\
FINRA appropriately highlighted its retrospective review of the current
day trading rules, the broad response received in response to its
retrospective review, and the extensive outreach it engaged in
developing the rule proposal.\106\ There is no requirement for FINRA to
seek public comment on a proposed rule change prior to filing it with
the Commission. Further, the proposal is subject to the notice and
comment process under section 19(b) of the Exchange Act.\107\ As
discussed above, the Commission received numerous comments on the
proposal from various market participants including individuals,
broker-dealers, and associations.\108\ Commenters overwhelmingly
supported replacing the current day trading margin requirements with an
intraday margin requirement.\109\ This proposed rule change will
eliminate burdensome requirements with an intraday margin requirement
that will continue to address the risks of intraday margin exposures.
Further, FINRA undertook an economic impact assessment of the proposed
rule change, which included discussion of the regulatory need for the
proposed rule change, economic baseline, economic impacts, and
alternatives considered.\110\
---------------------------------------------------------------------------
\105\ See NASAA Letter.
\106\ See FINRA Letter and Notice, 91 FR at 1581-82.
\107\ Under Section 19(b) of the Exchange Act, self-regulatory
organizations (``SROs'') generally must file proposed rule changes
with the Commission for notice, public comment, and Commission
approval, prior to implementation. 15 U.S.C. 78s(b). Section
19(b)(1) of the Exchange Act requires each SRO to file with the SEC
``any proposed rule or any proposed change in, addition to, or
deletion from the rules of . . . [a] self-regulatory organization.''
15 U.S.C. 78s(b)(1).
\108\ See Comment File.
\109\ See section III.B. above (discussing comments).
\110\ See Notice, 91 FR at 1585-89.
---------------------------------------------------------------------------
B. Requests for Clarifications and Guidance on Certain Aspects of the
Proposal
In response to the Notice, some commenters requested clarifications
or guidance regarding certain aspects of the proposed rule change.\111\
FINRA appropriately responded to those comments or stated it will
provide further explanation and guidance to assist members with these
and other operational issues, as appropriate, if the Commission
approves the proposal.\112\ This is consistent with other proposed rule
changes where FINRA answered questions and provided further guidance to
market participants regarding implementation of new rules.\113\
---------------------------------------------------------------------------
\111\ See Alpaca Letter; SIFMA Letter.
\112\ See FINRA Letter--Specific Suggestions from Commenters
Supporting the Proposal. In the Notice, FINRA stated that it will
make further guidance available on its website, including training
materials, illustrative examples, and other guidance as appropriate,
regarding the application of intraday margin. See Notice, 91 FR at
1584.
\113\ See, e.g., Frequently Asked Questions (``FAQs'') Regarding
Covered Agency Transaction Margin under FINRA Rule 4210, available
at: www.finra.org (providing guidance from FINRA in the form of
answers to FAQs regarding the application of Rule 4210 as amended by
SR-FINRA-2021-010).
---------------------------------------------------------------------------
C. Implementation Period
Finally, in response to the proposed implementation period of 12
months after FINRA announces the effective date of the proposed rule
change in a Regulatory Notice, commenters expressed strong preferences
for prompt implementation of the proposal.\114\ Two commenters
expressed support for the 12-month timeframe,\115\ with one stating
there is a risk that customers will migrate to firms that implement the
intraday margin requirements more quickly than others.\116\ Two
commenters recommended that FINRA extend the implementation timeframe
to 18-months to provide members more time to update their processes and
methodologies.\117\ One commenter supporting an 18-month timeframe also
recommended an interval of 30 to 60 days between FINRA's announcement
of the new requirements and the effective date when members can apply
the new requirements to prevent broker-dealers from being placed at a
competitive disadvantage while completing their operational
preparations.\118\ Another
[[Page 20739]]
commenter stated that a 12-month phased implementation may create
confusion among customers and competitive pressures for firms to
attempt to gain an advantage through early adoption of the new intraday
requirements.\119\ This commenter suggested a single, uniform
implementation date of six months after the Commission approves the
proposed rule change or a date that would be no earlier than late-
2026.\120\
---------------------------------------------------------------------------
\114\ See Darendeli Letter; Letter from Abi Hernandez (Feb. 13,
2026); Letter from Ethan Chia (Feb. 12, 2026); Letter from Jack
Griffith (Jan. 23, 2026).
\115\ See Alpaca Letter; Lightspeed Letter.
\116\ See Lightspeed Letter.
\117\ See SIFMA Letter; STA Letter.
\118\ See STA Letter.
\119\ See Schwab Letter.
\120\ See Schwab Letter.
---------------------------------------------------------------------------
In response to the comments, FINRA highlighted the very strong
interest numerous commenters expressed in replacing the current day
trading requirements with the new intraday margin requirements and
their expectation that implementation will proceed promptly.\121\
Balanced with this, FINRA stated it is important to ensure, to the
extent possible, that the transition to the new requirements takes
place in an orderly and fair fashion.\122\ Having considered the
comments, FINRA stated that it believes a limited interval could serve
the interest of orderly markets, but should not be so long as to
frustrate the general desire for the transition to proceed
expeditiously.\123\
---------------------------------------------------------------------------
\121\ See FINRA Letter.
\122\ See FINRA Letter.
\123\ See FINRA Letter.
---------------------------------------------------------------------------
As such, FINRA stated if the Commission approves the proposal, it
intends to issue a Regulatory Notice announcing an effective date of 45
days from publication of the Regulatory Notice, while allowing members
that need more time to implement the new requirements to phase-in
implementation over a period of 18 months from publication of the
Regulatory Notice.\124\ With regard to the timeframe for the phase-in
period given the additional information gained from the comments on how
much time members may need to prepare, FINRA believes extending the
phased implementation to 18 months from the date of the Regulatory
Notice is appropriate.\125\
---------------------------------------------------------------------------
\124\ See Amendment No. 1; FINRA Letter.
\125\ See FINRA Letter; Amendment No. 1.
---------------------------------------------------------------------------
FINRA's proposed implementation schedule is appropriate and
consistent with the requirements of the Exchange Act. An 18-month
phased-in implementation timeframe from the date of publication of the
Regulatory Notice will provide flexibility for broker-dealers to
implement the new intraday margin requirements any time after the 45-
day effective date. The 45-day effective date following the publication
of the Regulatory Notice, during which all member firms must apply the
current day trading rules should facilitate a smooth transition to
implementation.
IV. Solicitation of Comments on Amendment No. 1
Interested persons are invited to submit written data, views, and
arguments concerning whether Amendment No. 1 is consistent with the
Act.
Comments may be submitted by any of the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-FINRA-2025-017 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-FINRA-2025-017. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the filing will be available for inspection and copying at
the principal office of FINRA. Do not include personal identifiable
information in submissions; you should submit only information that you
wish to make available publicly. We may redact in part or withhold
entirely from publication submitted material that is obscene or subject
to copyright protection. All submissions should refer to File Number
SR-FINRA-2025-017 and should be submitted on or before May 8, 2026.
V. Accelerated Approval of the Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the thirtieth day
after the date of publication of the notice of the filing of Amendment
No. 1 in the Federal Register. Amendment No. 1 revised the timing of
the phased implementation of the proposed rule change in direct
response to comments received, balancing the interest expressed by
commenters for implementation to proceed promptly with the need for an
orderly and fair transition to the new requirements. Amendment No. 1
does not alter any substantive provisions of the proposed rule change
from what is set forth in the Notice, which was subject to public
comment. Further, Amendment No. 1 does not raise any novel regulatory
concerns that have not previously been subject to comment.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act,\126\ to approve the proposed rule change, SR-
FINRA-2025-017, as modified by Amendment No. 1, on an accelerated
basis.
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\126\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
It is therefore ordered pursuant to Section 19(b)(2) of the
Exchange Act \127\ that the proposed rule change (SR-FINRA-2025-017),
as modified by Amendment No. 1, be, and hereby is, approved on an
accelerated basis.
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\127\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\128\
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\128\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-07485 Filed 4-16-26; 8:45 am]
BILLING CODE 8011-01-P