Glossary
Regulation T
The Federal Reserve rule (12 CFR 220) on broker credit: up to 50% of a margin purchase can be borrowed, plus cash-account payment rules.
On this page
Regulation T (Reg T) is the Federal Reserve Board rule, at 12 CFR Part 220, that governs how much credit US broker-dealers may extend to customers to buy securities. Its best-known number is the 50% initial margin requirement: you can borrow at most half the purchase price of most stocks in a margin account. Reg T also sets the rules for paying for trades in cash accounts, including the "free-riding" freeze.
How it works
Margin accounts. For margin-eligible equity securities, Reg T requires an initial deposit of at least 50% of the purchase price. That number has been 50% since 1974. FINRA and individual brokers add their own rules on top: at least $2,000 of equity to trade on margin, and maintenance of at least 25% equity afterward, with many firms requiring more.
Cash accounts. You must pay in full for purchases. Reg T's payment period is the standard settlement cycle plus two business days, so T+3 now that stocks settle T+1. If you buy a stock and sell it before paying for it, a practice called free-riding, the broker must freeze the account for 90 calendar days, during which purchases must be fully paid on the trade date.
What it does not cover
Reg T sets the initial requirement only. Ongoing maintenance levels and margin calls come from FINRA Rule 4210 and firm "house" rules, and so do the day-trading rules, which FINRA overhauled in 2026. Reg T also does not cover portfolio margin accounts, which are governed by separate risk-based rules. A good-faith violation in a cash account, buying with unsettled sale proceeds and then selling before they settle, is a broker and FINRA concept rather than a Reg T term.