back1. Introduction
On April 15, 2026, the Securities and Exchange Commission (the “SEC”) approved amendments to FINRA Rule 4210 (Margin Requirements) that fundamentally restructure the regulatory framework governing day trading in customer margin accounts (the “2026 Amendments”).
The amendments eliminate the long‑standing “pattern day trader” regime and replace it with a new “intraday margin” framework designed to align margin requirements more closely with real‑time intraday risk.
The amendments reflect the culmination of FINRA’s retrospective review of its day trading rules, initiated in Regulatory Notice 24‑13, which review included extensive outreach to FINRA member firms (virtually all U.S.-registered securities broker and dealers), investors, and industry groups.
The 2026 Amendments are intended to modernize margin regulation for intraday trading, reduce unnecessary frictions for customers, and provide broker‑dealers with greater flexibility in monitoring and managing intraday risk. As a general matter, the 2026 Amendments overhaul the day-trading rules, replacing the current day trading regulatory framework with an “intraday margin” framework that will be heavily reliant on supervision and account surveillance.
As with all major regulatory modernizations, these amendments will require FINRA-member firms to: implement policies and procedures that are reasonably designed to achieve compliance with the new rules; modify firm systems to accommodate the new requirements; and training for firm personnel on the new framework, and on the focus on intraday surveillance and supervision.
1.1 What is margin?
“Margin” refers to credit extended by a broker‑dealer to a customer for the purchase or carrying of securities. In a margin account, a customer may borrow funds or securities from the broker‑dealer, subject to initial margin, maintenance margin, and other requirements designed to ensure that the account maintains sufficient equity relative to its risk exposure.
FINRA Rule 4210 is the principal FINRA rule regulating margin. Rule 4210 establishes minimum margin standards for customer accounts, supplementing Regulation T of the Federal Reserve Board and the SEC’s net capital requirements. These margin rules are intended both to protect customers from excessive leverage and to mitigate risk to broker‑dealers arising from customer trading activity.
1.2 What is Regulation T, and what are the basic provisions of Regulation T?
Regulation T is a regulation issued by the Board of Governors of the Federal Reserve System that governs the extension of credit by broker‑dealers for the purpose of purchasing or carrying securities.
At a high level, Regulation T establishes baseline requirements for initial margin—the amount of equity a customer must provide at the time he or she purchases securities on margin—as well as rules governing payment, settlement, and liquidation of transactions in margin accounts.
The basic policy goal of Regulation T is limiting the use of credit in the securities markets in order to reduce excessive leverage by investors (especially retail investors) and systemic risk. Among other things, Regulation T requires broker‑dealers to obtain timely payment for securities purchases, restricts the circumstances under which credit may be extended, and prescribes remedies where customers fail to meet payment or margin obligations, including mandatory liquidation in certain circumstances.
1.3 How does Regulation T interact with FINRA Rule 4210?
Regulation T operates in tandem with FINRA Rule 4210, regulating different aspects of margin trading. Regulation T establishes minimum standards for the extension of credit at the initial stage of a transaction, while FINRA Rule 4210 imposes ongoing margin and maintenance requirements applicable throughout the life of a position and, more broadly, governs how broker‑dealers manage customer credit risk.
FINRA Rule 4210 supplements Regulation T. As a practical matter, broker‑dealers must ensure that customer margin accounts remain in continuous compliance with both Regulation T and Rule 4210, applying the more stringent requirement where the two overlap. The 2026 Amendments revise FINRA’s treatment of intraday and maintenance margin risk, replacing the former “pattern day trader” framework with an “intraday margin” model that functions alongside Regulation T’s initial margin requirements.
1.4 What is day trading?
For purposes of Rule 4210, “day trading” historically referred to the purchase and sale (or sale and purchase) of the same security on the same day in a margin account, subject to certain exceptions. Day trading has long been recognized by regulators as presenting unique risks due to short‑term price volatility and the use of leverage.
The 2026 Amendments address the margin requirements applicable to day trading and do not modify the account approval or disclosure framework for firms that promote day‑trading strategies. Other FINRA rules govern day‑trading account approval and risk disclosure (see, for example, FINRA Rules 2130 and 2270).
1.5 Summary of the day trading rules prior to the 2026 Amendments: pattern day trading
Prior to the 2026 amendments, Rule 4210 imposed a distinct and highly prescriptive margin regime for customers deemed to be “pattern day traders.”
In general:
- A customer who executed four or more day trades within five business days will generally be designated a pattern day trader.
- Pattern day traders were required to maintain minimum equity of $25,000 in their margin accounts at all times.
- Trading was subject to special “day‑trading buying power” limits, calculated based on the prior day’s equity in the customer’s account.
- Failure to satisfy special margin calls within five business days triggered 90‑day trading restrictions and net capital deductions for broker‑dealers.
As noted above, the 2026 Amendments seek to modernize the pattern day trading rules, generally to accommodate day trading while taking advantage of improvements in technology that allow FINRA member firms to better supervise and control intraday risk in day trading accounts.
2. Summary of the 2026 Amendments
The 2026 amendments eliminate the day trading margin framework, including eliminating:
- The “pattern day trader” designation;
- The four‑day‑trade/five‑day test;
- The $25,000 minimum equity requirement;
- Day‑trading buying power calculations; and
- Associated special maintenance margin provisions.
In place of these concepts, the amended rule introduces a new “intraday margin” regime applicable to most customer margin accounts.
2.1 Core features of the new intraday margin framework
“Intraday margin” refers to margin requirements measured against a customer’s maximum intraday exposure, rather than thresholds based on trade counts or prior‑day equity. The approach is designed to ensure that a customer maintains equity commensurate with risk at the point in time when exposure is created, regardless of whether the trading activity meets a formal definition of day trading.
Under new Rule 4210(d)(2), each broker‑dealer must determine whether a customer margin account incurs an “intraday margin deficit” on any day in which the account engages in an “IML‑reducing transaction” (i.e., a transaction that reduces the customer’s intraday margin level).
Key concepts include:
- Intraday Margin Level (IML): The amount the customer could withdraw (or would need to deposit) while maintaining required maintenance margin.
- Intraday Margin Deficit: The largest negative IML reached during the trading day after any IML‑reducing transaction.
Broker‑dealers may comply with the rule by:
- Implementing real‑time monitoring and preventing trades that would create or increase intraday margin deficits; or
- Performing a single end‑of‑day calculation to identify the largest intraday margin deficit for the day.
The rule sets parameters governing how intraday margin is calculated, including treatment of sweep balances, valuation timing, offsets for closing positions, and assumptions when transaction sequencing cannot be demonstrated.
Among the notable features of the new rule is that FINRA members may treat customer deposits U.S. banks as a credit balance in the customer’s account for purposes of computing an IML or intraday margin deficit, provided that the deposit is maintained under a Sweep Program operated by the member.
Another notable feature of the new rule is that the new rule permits a broker-dealer to use values more recent than the execution price or previous day’s closing price to determine the market value of a position. For example, a broker-dealer that makes a single end-of-day calculation of its customers’ intraday margin deficits could use the same end-of-day prices for that calculation as it uses for determining whether the customer has a maintenance margin deficiency as of the end of the day.
2.2 Satisfaction of intraday margin deficits and trading restrictions
If an intraday margin deficit occurs:
- The deficit must be satisfied as promptly as possible, through deposits or liquidation of positions.
- A deficit remains outstanding for up to 15 business days, unless satisfied earlier.
- If a customer fails to satisfy an intraday margin deficit by the fifth business day, and does so as a practice, the broker‑dealer must impose a 90‑day freeze on creating or increasing debit balances or short positions (other than to close positions).
The rule provides limited exceptions for small deficits (the lesser of 5% of equity or $1,000) and deficits arising under extraordinary circumstances.
2.3 Portfolio margin updates
The amendments also revise the portfolio margin provisions of Rule 4210. Portfolio margin accounts with less than $5 million in equity must now be subject to intraday risk monitoring consistent with the new framework, and broker‑dealers must incorporate intraday risk procedures into their written portfolio margin risk analyses.
3. Regulatory Notice 26‑10: FINRA revises intra‑day margin
Regulatory Notice 26‑10, published April 20, 2026, provides interpretive guidance on the new intraday margin rule, adopting new intraday margin standards to replace the former day trading margin requirements.
Regulatory Notice 26-10 provides a summary of the 2026 Amendments, as well as additional guidance regarding compliance with the new regime.
3.1 Implementation timeline
Regulatory Notice 26‑10 also establishes the implementation timeline. The amendments become effective June 4, 2026, with an 18‑month phase‑in period through October 20, 2027, for firms requiring additional time to implement systems and procedures.
4. Conclusion
The adoption of the 2026 Amendments represents the most significant revision of day trading margin regulation in decades. By abandoning the pattern day trader framework and replacing it with an intraday margin model, FINRA has shifted from categorical restrictions toward a risk‑sensitive, exposure‑based approach, but also towards an approach that requires substantial procedures and updated technology for surveillance and supervision.
Broker‑dealers should carefully assess the operational, technological, and supervisory implications of the new requirements, including system changes, written supervisory procedures, training, and customer communications.
While the new framework offers greater flexibility, it also places increased emphasis on each firm’s ability to identify, monitor, and control intraday risk in margin accounts.