Regulation T

Regulation T

Federal Reserve Board regulation that deals with grantingcredit to customers by securities brokers, dealers, and exchange member as far as initial margin requirements and securities that are covered under the rules.

Regulation T

A Federal Reserve Board rule governing the opening and maintaining of margin accounts. Specifically, Regulation T governs the initial margin and the maintenance margin, which are, respectively, the collateral necessary to open and to maintain a margin account. While the percentages have changed over time, the initial margin is currently 50% of the amount borrowed, and the maintenance margin is 25%.

Regulation T

A Federal Reserve regulation that specifies the maximum initial credit extension that may be given to investors in securities. The initial margin requirement has varied from 40 to 100% since the regulation was established under provisions of the Securities Exchange Act of 1934. Listed stocks, convertible bonds, and many over-the-counter stocks are covered by Regulation T. See also freeriding, frozen account, special miscellaneous account.

Regulation T.

Regulation T is the Federal Reserve Board rule that governs how much you can borrow through your margin account to cover the purchase price of a security. This initial margin is 50% of the total cost.

The New York Stock Exchange (NYSE) and NASD additionally require your account to have a minimum margin of $2,000 or the full cost of the purchase, whichever is less, at the time you trade, plus a maintenance margin of at least 25% of the total market value of the securities in your account at all times.

Individual broker-dealers may and often do require higher minimum and maintenance margins.