FINRA Ends $25,000 Day-Trader Rule, Opens Small Accounts

Financial Industry Regulatory Authority officials ended the pattern day trader rule on June 4 by amending Rule 4210. The change removes the $25,000 minimum equity requirement and eliminates automatic pattern-day-trader labels and trade-count blocks that had restricted active short-term traders.

Under the revised rule, broker-dealers must monitor margin levels during the trading day. If an account’s equity falls below required thresholds while positions remain open, a firm may restrict new trades, issue a margin call or liquidate positions according to its risk policies. Regulation T’s $2,000 minimum to open a margin account remains in place; accounts below that level must operate as cash accounts and use settled funds for new purchases.

The original rule was adopted in 2001 after the dot-com crash to limit risky short-term trading and ensure brokers held sufficient collateral against margin accounts. Previously, any margin account that executed four or more day trades within five business days had to maintain at least $25,000 in equity. A day trade is defined as buying and selling the same stock or equity option within the same trading session.

Brokerages have implemented the change at varying speeds. Retail-focused platforms including Robinhood, Webull, tastytrade and TradeZero updated systems on June 4. Schwab’s thinkorswim updated on June 8. E*TRADE, Fidelity and Interactive Brokers announced plans to revise systems later. Firms retain discretion to set and enforce their own intraday risk controls and surveillance thresholds.

The amendment mainly affects small stock and equity options traders. Most spot crypto markets were not subject to the prior FINRA margin rules, so those markets saw little direct change.

Regulators said the new framework replaces a binary trade-count restriction with continuous intraday margin oversight and firm-level controls. Market participants and broker systems will determine how intraday limits are applied in practice. Day trading can lead to rapid losses, margin pressure and intraday margin calls that may result in forced liquidation of positions.