FINRA’s new intraday margin framework is intended to shift the focus from counting day trades to the risk investors carry during the trading day, according to FINRA officials.

The framework, which became effective June 4, 2026, eliminates the pattern day trader designation and $25,000 minimum equity requirement and aligns intraday margin requirements with those applied to end-of-day positions.

Speaking on the September 1 episode of FINRA Unscripted, Racquel Russell, Director of Capital Markets Policy and Head of the Office of Financial and Operational Risk Policy, and James Barry, Senior Director, Credit Regulation, discussed why FINRA changed the rules and what the new approach means for investors and member firms.

Russell said FINRA began a retrospective review of the day-trading rules in October 2024, seeking public feedback and gathering trading data from its members.

“What we found confirmed what we’ve been hearing for years, and that’s that the old rules, particularly the pattern day trader designation, as well as the $25,000 minimum equity requirement, were seen as unnecessarily restrictive in today’s markets. Those were designed for a different era,” Russell said.

Rather than make incremental changes, FINRA decided to replace the requirements with a framework that “ties a customer’s margin obligation directly to the actual market exposure that they carry at any given point during the trading day,” she said.

Barry said the previous framework developed against a backdrop of much higher trading costs. In the late 1990s, commissions were still around $16 per trade, and those costs could reduce the equity in accounts of investors who traded frequently.

He said a study conducted in the late 1990s determined that, based on commission rates at the time, an investor would need at least $15,000 to essentially break even with active trading. “Since we’re close to a zero-commission environment, the $25,000 didn’t really hold like a specific requirement in that case. That’s how we got comfortable with eliminating that aspect of it,” Barry said.

Under the new approach, Barry said maintenance margin requirements that apply to overnight or end-of-day positions are effectively maintained throughout the trading day. “The easiest way that I can describe the rule is it’s effectively ensuring that the maintenance margin requirements, as required by the rule for overnight positions or end-of-day positions, must be maintained throughout the day,” he said.

Barry said FINRA wanted to standardize the approach rather than maintain a separate set of margin requirements specifically for day trading. The framework also replaces day-trading buying power with an “intraday margin level,” or IML. Barry said the change shifts the calculation toward determining the margin required on an account at any given point during the trading day.

The intraday margin level is the amount of equity in an account above the required margin, he said. If the IML becomes negative, it can result in a maintenance margin call at the end of the day, but it does not automatically force an intraday liquidation. Barry said the decision to liquidate an account during the day rests with the member firm.

Barry also described several consequences of the previous rules that emerged through FINRA’s discussions with investors. He said some investors with accounts below $25,000 told FINRA they would not place stop-loss orders after buying a security because a sale during the same day could count toward their day trades. “That’s where you start thinking, O.K., there’s some negative parts of the rule that weren’t particularly, I think, a desired outcome of the rule,” Barry said.

He also pointed to pin risk involving options exercise or assignment. Some customers would hold stock until the following day rather than sell it on the same day as an exercise because the transaction could otherwise count as a day trade, Barry said.

He said the previous rule also did not adequately capture newer products and strategies, including zero-days-to-expiration options and leveraged ETFs. “As I mentioned earlier, 0DTE had no margin requirements because they disappeared by the end of the day,” Barry said. “They were kind of invisible to the old rule. That invisibility is gone. So now there’s margin requirements associated with them as well.”

Another issue that surprised FINRA during its review was investors borrowing money to reach the $25,000 threshold, Barry said. He cited credit cards, home equity lines of credit and personal loans among the sources investors used. “We didn’t anticipate, I think, this part of the process occurring,” he said.

For member firms, Barry stressed that FINRA’s requirements establish a minimum: “FINRA’s margin rule is a minimum standard. It’s not the standard.”

Barry said firms are expected to set their own house margin requirements based on their credit judgment and understanding of customers’ trading activity. Firms can also liquidate an account if it enters a margin deficit during the trading day.

Member firms have until October 20, 2027, to fully migrate to the framework. Russell said firms will need to update their written policies and procedures as well as their technology. Barry said FINRA has also created 20 interpretations to help firms understand the rule and its calculations.

Russell said eliminating the $25,000 requirement and pattern day trader designation does not change the risks associated with frequent trading. “Frequent trading strategies are not for everyone. Buying on margin and shorting are strategies where you can lose more money than your original investment,” she said.