Regulators Eliminate $25,000 Minimum Equity Rule for Day Trading

Regulators are moving to eliminate the $25,000 minimum equity rule for pattern day trading, making active day trading more accessible to smaller accounts. The change, pending SEC approval, replaces the long-standing threshold put in place in 2001 to prevent excessive risk-taking with volatile internet stocks during the dot-com bubble and crash.

The Financial Industry Regulatory Authority is replacing the $25,000 minimum equity rule with an intraday margin rule, where intraday buying power is based on margin requirements for positions taken during the day. This reflects how technology and market access have changed since the original rules were adopted.

The rule change could lead to increased options trading and activity for brokers like Robinhood. Following the FINRA news, Robinhood shares rebounded from an earlier loss and were up 1% in Wednesday trading.