Rule Atlas
FINRA Rule 4210: Credit Extension and Margin Accounts: Regulation T and Maintenance Requirements
Under FINRA Rule 4210 (FINRA / SEC Customer Protection Rule 15c3-3), credit Extension and Margin Accounts: Regulation T and Maintenance Requirements establishes the authoritative rules tested on the FINRA Series 99. Master the federal and FINRA rules governing the extension of credit in margin accounts, including initial and maintenance margin requirements. VoraPrep verifies every threshold, worked table, and practice question below against the current FINRA Series 99 blueprint.
Current Statutory Thresholds & Limits in Effect
Core Statutory Concepts
| Feature | Regulation T (Federal Reserve) | FINRA Rule 4210 (SRO) |
|---|---|---|
| Governs | Initial extension of credit | Maintenance of equity |
| Requirement | Initial margin: 50% of purchase price | Maintenance margin: 25% for long, 30% for short |
| Payment Due | T+3 (Trade date + 3 business days) | As soon as equity falls below minimum |
| Who Sets | Federal Reserve Board | FINRA (Self-Regulatory Organization) |
A registered representative explains the terms of a margin account to a new client. The client agrees to open the account and signs a loan consent agreement. What does this agreement permit the broker-dealer to do?
Practitioner Application: Credit Extension and Margin Accounts: Regulation T and Maintenance Requirements
A client wants to purchase 1,000 shares of XYZ stock, currently trading at $60 per share, using their margin account. As an Operations Professional, you must calculate the initial margin requirement, understand the payment due date, and be aware of the firm's maintenance margin requirements to prevent a margin call. Incorrect calculations or failure to adhere to federal and SRO rules can lead to significant operational failures and customer issues.
- Margin accounts allow customers to borrow money from their broker-dealer to purchase securities, using the purchased securities as collateral. This leverages their investment potential but also increases risk. The extension of credit in margin accounts is governed by both federal regulations (Federal Reserve Board's Regulation T) and Self-Regulatory Organization (SRO) rules (FINRA Rule 4210).
- Regulation T (Federal Reserve Board) Regulation T governs the extension of credit by broker-dealers to customers for the purchase of securities. It sets the initial margin requirements and the timeframe for payment.
Common FINRA Series 99 Distractors on FINRA Rule 4210
- 1⚠️ Exam trap: Confusing initial (Reg T) and maintenance (FINRA 4210) margin percentages. Remember 50% for initial (buying power calculations) and 25% (long) / 30% (short) for maintenance (margin call calculations).
- 2⚠️ Exam trap: Incorrect Reg T payment due date. With T+1 settlement, the Reg T payment is due T+3. Do not confuse it with the T+1 security settlement date.
- 3⚠️ Exam trap: Misinterpreting the 'greater of $2,000 or 100%' rule. This applies specifically to the initial deposit for opening a margin account and making the first margin purchase, not to all subsequent purchases.
- 4⚠️ Exam trap: Believing the Loan Consent Agreement is mandatory. It is optional, unlike the Margin and Hypothecation Agreements.
- 5Regulation T (Fed): Sets initial margin at 50% for most equities and dictates payment due date as T+3.
Frequently Asked Questions: FINRA Rule 4210
What is the core rule under FINRA Rule 4210 (Credit Extension and Margin Accounts: Regulation T and Maintenance Requirements)?
Under FINRA Rule 4210 (FINRA / SEC Customer Protection Rule 15c3-3), credit Extension and Margin Accounts: Regulation T and Maintenance Requirements establishes the authoritative rules tested on the FINRA Series 99. Master the federal and FINRA rules governing the extension of credit in margin accounts, including initial and maintenance margin requirements. VoraPrep verifies every threshold, worked table, and practice question below against the current FINRA Series 99 blueprint.
How is FINRA Rule 4210 tested on the FINRA Series 99?
⚠️ Exam trap: Confusing initial (Reg T) and maintenance (FINRA 4210) margin percentages. Remember 50% for initial (buying power calculations) and 25% (long) / 30% (short) for maintenance (margin call calculations). ⚠️ Exam trap: Incorrect Reg T payment due date. With T+1 settlement, the Reg T payment is due T+3. Do not confuse it with the T+1 security settlement date.
Where can I practice FINRA Series 99 questions on Credit Extension and Margin Accounts: Regulation T and Maintenance Requirements?
Test yourself instantly with the free playable FINRA Series 99 question on this page, or launch VoraPrep's full FINRA Series 99 adaptive question bank, interactive lessons, and 1:1 exam simulator at voraprep.com/series99.