Regulation T¶
Regulation T is a Federal Reserve Board rule (12 CFR 220) that limits the credit brokers can extend to customers buying securities, requiring investors to deposit at least 50% of the purchase price of any marginable security as initial margin. The broker may lend the remaining 50%, capping overnight leverage at 2:1 for standard retail margin accounts. Reg T also governs payment timing in cash accounts, requiring settlement within two business days and penalizing premature sales of unsettled positions as good faith violations.
HOW IT WORKS¶
When you buy $10,000 of stock on margin, Reg T requires $5,000 of your own equity; the broker funds the other $5,000. This 50% initial margin requirement is a floor — FINRA Rule 4210 sets a separate 25% maintenance minimum, and most brokers apply stricter house rules of 30–40% on volatile names. If your equity falls below the maintenance threshold, the broker issues a margin call. Reg T calls must be met within four business days; maintenance calls are typically due immediately. Day traders with $25,000 or more in equity receive 4:1 intraday buying power under the pattern day trader rule because those positions close before overnight Reg T requirements apply. Portfolio margin accounts, generally available above $100,000–$125,000 in equity, bypass the 50% rule entirely and use risk-based calculations that can permit substantially higher leverage on diversified positions.
IN TAPEBOARD¶
Tapeboard surfaces Reg T exposure directly in the margin account dashboard. Your overnight buying power display reflects the 2:1 Reg T cap on available settled cash, while the intraday buying power line shows the 4:1 PDT multiplier when your account qualifies. Position-level margin detail flags securities that carry no loan value under Reg T — including options — so leverage estimates stay accurate. Cash account users see good faith violation warnings before they place a sell order on an unsettled position, and the account activity log tracks settlement dates against the T+1 window to prevent accidental violations.