FINRA clarified interpretations of FINRA Rule 4210(b) ("Initial Margin") regarding minimum equity requirements in a customer's margin account.
The guidance is kept on a FINRA webpage, Interpretations of FINRA's Margin Rule, which tracks the rule section by section.
In the update, FINRA replaced Interpretation /02 with the following modified interpretations:
- /021 Minimum Equity, which clarifies the exceptions to the $2,000 minimum equity requirement, including in an instance of full cash payment or of securities transactions resulting in positions covered by Rule 4210(e)(2)(F), (G) or (H);
- /022 Effect of Market Value Decline below $2,000 Equity, which states that no deposit or liquidation is necessary if the equity falls below $2,000 because of a decline in the market value;
- /023 Withdrawals below $2,000 Equity, which clarifies when withdrawals are permissible;
- /024 Minimum Equity - Cash Account, which establishes the minimum equity requirement in a cash account; and
- /025 Minimum Equity - Pattern Day Traders, which clarifies that pattern day traders are subject to a $25,000 minimum equity requirement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
