How does Reg-T affect me?
It sets the initial margin requirement on a loan. The current requirement is 50%. This means that every time you purchase a stock you must deposit 50% of the purchase price. Although the Federal Reserve can adjust this rate, it is done very rarely. The Federal Reserve also generates a list of marginable securities. Pink Sheet and Bulletin Board traded securities can not be purchased on margin. Low priced stocks on the listed exchanges (NYSE, AMEX) are also not eligible to be margin. This means that these securities have to be paid for in full. To be sure, ask your broker prior to purchasing a stock if it is eligible to be purchased on margin. What is a maintenance requirement? Reg-T only deals with the initial margin requirement. That is, how much money you have to deposit at the time of purchase. The maintenance requirement dictates the minimum equity requirement. In other words, what portion of the account must be yours at all times. This rate is set by your broker and can vary. Most
