Regulation T (Reg T): Initial Margin and Payment Deadlines
Regulation T is the Federal Reserve rule that governs credit extended by broker-dealers to customers. It sets 50% initial margin on most equity purchases and requires payment within two business days after the standard settlement date, which is T+3 under T+1 settlement.
What Reg T covers
Reg T applies to cash accounts and margin accounts at broker-dealers. It establishes the initial margin percentage and the payment period customers must meet for purchases. Maintenance requirements are set separately by FINRA and the firm.
The payment deadline
Regulation T gives customers two business days after the regular-way settlement date to pay. With T+1 settlement in effect since May 2024, payment is due on trade date plus three business days (T+3, also written S+2).
Frequently asked questions
What is Regulation T?
Regulation T is the Federal Reserve rule that governs credit extended by broker-dealers to customers. It sets 50% initial margin on most equity purchases and requires payment within two business days after the standard settlement date, which is T+3 under T+1 settlement.
How does Regulation T show up on the exam?
Reg T is the answer when a question asks who sets the initial margin requirement. If the question is about maintenance, think FINRA Rule 4210.
Practice this concept
Sources
- Federal Reserve Regulation T (12 CFR Part 220)
- SEC Rule 15c6-1
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