FINRA rule change scraps pattern day trader $25,000 minimum

The news: In a FINRA rule change announced April 20, 2026 through Regulatory Notice 26-10, FINRA adopted new intraday margin standards that replace the day trading margin requirements in Rule 4210. The SEC approved the amendments on April 14, 2026. They took effect June 4, 2026, with a phase-in period running until October 20, 2027.

Why it matters: The change eliminates two features that have defined active retail trading for nearly 25 years: the day-trade count used to label customers as “pattern day traders,” and the $25,000 minimum equity requirement that came with that label. Traders with smaller margin accounts had long been restricted in how often they could day trade. The new framework shifts the focus from counting trades to measuring actual intraday risk in the account.

How it works: Firms must determine a customer’s “intraday margin deficit,” which FINRA defines as the highest shortfall between required margin and account equity following a transaction that reduces the account’s intraday margin level. Key mechanics:

• Deficits must be satisfied “as promptly as possible”
• A deficit can remain outstanding for up to 15 business days unless met earlier
• A 90-day freeze applies if a customer fails to meet a deficit by the fifth business day and makes a practice of not meeting deficits
• Deficits below 5% of account equity or $1,000 do not trigger the freeze

Firms may also reduce or eliminate a deficit using sweep program deposits, current market values, simultaneous treatment of multi-leg strategies and net deposits.

The big picture: The rule replaces a blunt, count-based test with a risk-based one. In principle, a customer with modest equity who trades frequently but keeps positions within margin limits is no longer penalized for activity alone, while a customer who builds outsized intraday exposure faces deficit calls regardless of account size. The tradeoff is operational: broker-dealers must calculate margin on an intraday basis and build systems to track deficits, deadlines and freezes.

What’s next: Firms have until October 20, 2027 to complete the phase-in. Customers should expect brokerage disclosures and account agreements to change as firms implement the new standards, and firms will need to explain to customers how deficit calls, deadlines and freezes work in practice.