FINRA has replaced the pattern day trader rule and its $25,000 minimum

The pattern day trader (PDT) designation for US margin accounts, along with the count of four day trades in five business days and the $25,000 equity minimum, has been removed from FINRA's margin rule, effective June 4, 2026. Your broker is allowed to switch later, as late as October 20, 2027, and until it does it may still count your day trades under the old rule. To find out which set of rules your account is on now, ask your broker's support desk or look through the rule-change notices it has sent you.

Under the new standard the $25,000 hurdle is gone and a different constraint takes its place: the standard watches for intraday margin deficits. A deficit has to be covered as promptly as possible, and an account that makes a practice of not doing so, and also leaves one deficit uncovered past the fifth business day after it occurred, can't open or add to short positions or take on or increase a debit balance until the deficit is covered or 90 calendar days have passed. The $2,000 minimum equity for margin accounts stays as it was, and cash accounts are outside the scope of the change.

The PDT rule being replaced: four day trades in five business days plus $25,000 in equity

The old rule sat in the day trading provisions of Rule 4210, the margin rule of FINRA (the Financial Industry Regulatory Authority). The SEC summarized it in its Federal Register notice on the proposal:

• A day trade is buying and selling, or selling and buying, the same security on the same day in a margin account.
• A customer who makes four or more day trades within five business days is designated a pattern day trader. If day trades are 6% or less of the customer's total trades over those five business days, the designation doesn't apply.
• A customer with the designation has to keep minimum equity of $25,000 in the account.
• If a special maintenance margin call isn't met on time, the account can trade only on the cash available in it, for 90 days or until the call is met.

The same notice says these day trading margin requirements had been in use in their current form for nearly a quarter of a century, and were set after day trading became popular in the 1990s.

What changed when the intraday margin standard took effect on June 4, 2026

The SEC approved FINRA's amendments on April 14, 2026. On April 20 FINRA issued Regulatory Notice 26-10, which covers the replacement of the day trading margin requirements with new intraday margin standards and sets the effective date at June 4, 2026. The notice says the new rule replaces the old requirements in full, and it spells out two of them: the designation of pattern day traders by counting day trades, and the $25,000 minimum equity requirement. The current text of Rule 4210 no longer contains the terms pattern day trader or $25,000 either.

FINRA also wrote a page for investors, Understanding the New Intraday Margin Requirements, which sums the change up in four points:

1. Day trading no longer carries a $25,000 minimum equity requirement.
2. Pattern day traders are no longer designated by counting trades. Your broker instead monitors whether your account has adequate equity during the trading day relative to the positions you actually hold.
3. When equity isn't enough to cover your open positions, the account has an intraday margin deficit, which you're expected to cover as promptly as possible.
4. Repeatedly failing to cover deficits promptly may get the account restricted for up to 90 days.

Brokers can keep applying the old PDT rule until October 20, 2027

June 4 is the date the rule took effect. The day your own account moves to the new calculation is up to your broker. The rule comes with a phased implementation: members (that is, brokers) that need more time can phase the change in over 18 months, through October 20, 2027.

FINRA's reasoning when it filed the amendments was that members should get a transition period in which they can keep applying the existing day trading margin requirements where appropriate while they prepare to implement the new ones; the example it gave was doing this account by account. For an individual customer, that means your broker might keep operating under the old requirements during the transition, or might choose to migrate to the new standard sooner.

If your broker hasn't told you outright that your account has switched, the safer way to plan your trades is as if the old rule still applies: with less than $25,000 in equity, keep your day trades below four in any five business days.

How an intraday margin deficit is calculated and how soon it has to be covered

The new standard is built on three definitions, all in the definitions section of Rule 4210:

• Intraday margin level (IML): the amount of cash you could withdraw from the account while still meeting the maintenance margin requirement. When equity is below the maintenance margin required, the number is negative.
• IML-reducing transaction: a purchase or sale that lowers the IML, including one that results from an option being exercised or assigned; the expiration of an option held long in the account when that lowers the IML; and a withdrawal of cash or securities from the account.
• Intraday margin deficit: an amount determined by the broker that is not less than the absolute value of the largest negative IML after any IML-reducing transaction that day. Put more simply, it is the widest gap that opened up between the maintenance margin required and the equity in the account after an IML-reducing transaction.

The broker has to determine the deficit for every day on which the account has a transaction of this kind. An example with numbers: on one day an account makes two IML-reducing transactions, and the IML after each is $800 and then -$1,200. The most negative reading is -$1,200, so that day's intraday margin deficit is not less than $1,200.

On timing, the rule text says as promptly as possible. A deficit counts as covered if, between the end of the day it arose and the end of a later day, you have made net deposits to the account, or raised the IML some other way, by enough to equal it; FINRA's page on the basics of frequent day trading gives depositing funds or closing out some positions as examples. A deficit that hasn't been covered stays outstanding, at the longest until immediately after the close of business on the fifteenth business day after the date it occurred. The fifteenth business day is the longest a deficit can stay on the books. It is not a deadline for covering it: the requirement is as promptly as possible from the start.

How to do the monitoring is left to the broker. It can monitor margin accounts in real time and block orders that would create a deficit; it can compute the day's intraday margin requirement after the close and issue a margin call to accounts that had a deficit; or it can combine the two.

When uncovered deficits lead to a freeze of up to 90 calendar days on new shorts and borrowing

Rule 4210 calls this restriction the 90 Day Freeze. Two conditions have to hold together: the customer makes a practice of not covering intraday margin deficits as promptly as possible, and one deficit is still uncovered at the close of business on the fifth business day after it occurred. Once both hold, the broker must stop the customer from creating or increasing a short position or a debit balance (closing a short position is still allowed) for 90 calendar days after that fifth business day, or until the deficit is covered.

Small deficits are left out of that count, though they still have to be covered. A deficit that doesn't exceed the lesser of 5% of the equity in the margin account or $1,000 isn't counted toward a practice of not covering deficits, even if it isn't covered promptly. Deficits that the broker reasonably determines occurred under extraordinary circumstances, and that don't reflect how the customer usually behaves, don't count either.

Exemption threshold = the lesser of equity × 5% and $1,000

$20,000 in equity is where the two meet: 1,000 ÷ 5% = 20,000. Below it the threshold moves with equity, so an $8,000 account gets only $400; above it the threshold stays at $1,000.

The $2,000 minimum equity and the cash account rules did not change

The minimum equity provision in Rule 4210 is still there: a margin account needs equity of at least $2,000, except that cash need not be deposited in excess of the cost of the securities purchased. That $2,000 is the minimum equity for leveraged trading (trading on margin). You can trade in a margin account with less than $2,000 in equity, just without leverage, using only the cash you have in the account. This line was there before the rule change, and it governs whether you can borrow from your broker. The new standard constrains day trading at a different point, the IML after each trade.

The new standard applies to customers' margin accounts, other than good faith accounts and portfolio margin accounts. Cash accounts follow the rules they already had: securities you buy have to be paid for in full before you sell them. Buying and then selling the same security in a cash account without having paid for it is called free-riding; it violates the Federal Reserve's Regulation T and can bring strict account restrictions.

FINRA's figures are floors. Brokers are entitled to set higher requirements of their own, known as house requirements, and that includes a minimum equity above FINRA's.

In describing the change, FINRA cautions that frequent trading with margin remains a high-risk activity that calls for careful management of your funds. US stocks have no daily price limits; the brakes that do exist during the session include market-wide circuit breakers and single-stock trading pauses, and when you day trade on borrowed money, a loss is calculated on the whole position, the borrowed part included. Once your broker has switched and the $25,000 threshold no longer applies, a small account has all the more reason to set its own limit on how much it can lose in a day.

Ask your broker whether your account is on the old rule or the new standard

FINRA's investor page suggests contacting your broker to understand how the changes affect your account. When you do, get answers to these:

1. Is my account still under the old day trading margin requirements, or has it moved to the intraday margin standard? If it hasn't moved, when is that planned?
2. After the move, are orders blocked in real time, is the requirement computed after the close and then called, or both?
3. When a deficit occurs, how will I be notified, and how soon does the broker itself require it to be covered?
4. How far above FINRA's floors are the broker's own minimum equity and margin requirements?

Get the answers in writing if you can. If what a support agent told you and the rules your account is actually run under turn out to differ, you'll have something to point to.

Can a deficit get you liquidated the same day, and how much equity do you need?