Regulation T vs. FINRA Rule 4210: Initial Deposit and the $2,000 Minimum Rule
A customer opens a new margin account and enters a market order to buy 100 shares of a technology stock at $32 per share ($3,200 total purchase value). What is the minimum required dollar deposit the customer must make under Federal Reserve Regulation T and FINRA Rule 4210?
Under FINRA Rule 4210, if a purchase is between $2,000 and $4,000, the customer must deposit $2,000 (even though 50% Reg T is only $1,600).
Complete Analysis & Legal Rationale
Federal Reserve Regulation T requires a 50% initial margin deposit ($1,600 on a $3,200 trade). However, FINRA Rule 4210 imposes a strict minimum initial equity rule for margin accounts: (1) If the purchase is less than $2,000, the customer must deposit 100% of the purchase price; (2) If the purchase is between $2,000 and $4,000, the customer must deposit $2,000; (3) If the purchase exceeds $4,000, standard 50% Reg T applies. Because $3,200 is between $2,000 and $4,000, the required deposit is $2,000.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Under FINRA Rule 4210, if a purchase is between $2,000 and $4,000, the customer must deposit $2,000 (even though 50% Reg T is only $1,600).
Fails to adhere to margin rules for B.
Fails to adhere to margin rules for C.
Fails to adhere to margin rules for D.
Official Standard: Federal Reserve Regulation T requires a 50% initial margin deposit ($1,600 on a $3,200 trade). However, FINRA Rule 4210 imposes a strict minimum initi