SEC Approves Scrapping $25,000 Day Trader Minimum
Traders will face a lower barrier to day trading stocks and options after the Securities and Exchange Commission (SEC) approved proposed new rules on April 14, 2026.
Under the new rules, traders will no longer be required to maintain a minimum account balance of $25,000 to engage in frequent margin day trading. Under the new rules, traders will no longer be required to maintain a minimum account balance of $25,000 to engage in frequent margin day trading. Instead, eligible margin accounts of more than $2,000 will gain access to intraday margin buying power set by individual brokerages based on current positions and maintenance margin requirements.
Currently, under the old rules, four or more day trades in five business days triggers a "pattern day trader" designation and the $25,000 requirement. Under the new framework, the pattern day trader designation will be eliminated, and day trades will no longer be counted.
The new rules were proposed in 2025 by the Financial Industry Regulatory Authority (FINRA). FINRA has said it will announce the effective date of these rule changes—45 days out—through a Regulatory Notice after receiving SEC approval. FINRA's proposal also proposes an 18-month interim period in which brokerages can implement the new rules at their own pace.
Under the new rules, brokerages will have a choice to monitor accounts for margin shortfalls in real time or perform a single end-of-day check. Firms that opt for real-time monitoring could block trades that would create or increase intraday margin deficits. Charles Schwab plans to monitor accounts and adjust intraday margin buying power in real time.
Traders and brokerages have criticized the $25,000 balance requirement for years, saying it is too high and limits average traders' access to the market.
The requirement took effect in September 2001, not long after the dot-com bubble burst and during the first wave of widespread online day trading among retail traders. The regulation was intended to protect traders from steep losses, including those incurred through commissions on frequent trades, which were higher at the time.
In proposing the rule change, FINRA said the previous rule had become outdated, noting advancements in systems for controlling margin risk and declines in commissions—in many cases to zero. FINRA's board of governors approved the proposed rule changes in September 2025.
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