Margin Rates

The current Broker Call Rate is 2.00% as of 12/19/2008. Regal's margin rates are 1/2 point above the current Broker Call Rate.

Minimum equity requirements to open a Regal Margin Account:
Cash/Stock	$2,000
Cash/Options/Stock	$2,000
Margin/Options/Stock	$2,000 in marginable securities or cash

Margin Account Minimum Requirements

To open an Regal Discount Securities margin account, you must have at least $2,000 in cash or marginable securities in your account. Additional requirements may apply depending upon specific transactions and positions in your account.

Equities

Minimum Equity Requirements to Use Margin
A combination of:	Minimum:
Cash/Marginable Securities	$2,000
Short Sales of Equities	$2,000
Cash/Options/Stock	$2,000
Margin/Options/Stock	$2,000 in Marginable Securities or Cash

Note: Long option purchases have an initial and maintenance margin requirement of 100%. For spreads and uncovered options, please see Margin Minimum Equity Requirements below.

Options

Minimum Equity Requirements to Trade Certain Option Strategies
A combination of cash and marginable securities:	Minimum:
Spreads	$2,000
Equity and Index Spreads	$2,000
Spreads in an IRA	$2,000, Cash Only
Uncovered Options:
Naked Puts	$20,000
Naked Calls	$100,000
Naked Index	$500,000

Note: At this time, we do not allow margin borrowing on cash secured short puts, short calls, naked or spread positions.

Important Guidelines

Required Market Price for Stocks:Most stocks traded on major U.S. exchanges and Nasdaq-listed securities priced $3.00 and above are eligible for margin borrowing. Please note that some stocks including Pink Sheets or Bulletin Board Stocks are not eligible for margin borrowing.
Minimum Market Price for Stocks: Stocks priced under $3.00 are not eligible for credit towards margin requirements and are not credited to margin buying power.
Mutual Funds: Most mutual funds can be used as collateral, provided they've been held for at least 30 days Please note you cannot purchase mutual funds on margin.
Bonds: Most corporate, treasury, municipal, and government agency bonds are eligible for margin borrowing. Margin ability and margin requirements are subject without advance written notice to change based on liquidity, bond ratings, concentrations, and other risk factors.
Money market funds, certificates of deposit (CDs), annuities, and options are not available as collateral for margin borrowing.
Maintenance Calls: Maintenance calls are due in three (3) business days under normal conditions.
House Required Minimums: If equity drops below house required minimum, or a call is issued for any other reason, you may be required to immediately sell securities or deposit additional funds promptly.
Concentrated Accounts: Margin maintenance is higher for concentrated accounts and requirements may vary per security.
Margin Maintenance: Margin maintenance ranges from 30% - 100% depending on the particular securities in an account.
Increased Maintenance Requirements: From time-to-time, we may be required by our clearing firm to increase maintenance requirements due to overall firm concentration, or unusual market conditions. We further reserve the right to increase the requirements at our sole discretion.

Margin Account Maintenance and Initial Requirements

Stock Transactions
Stocks	Initial Requirements	Maintenance Requirement
$5.00 and above	50%	30%
$4.99 to $3.00	50%	50%
$2.99 and below	100%	100%

Short Stock Transactions
Stocks	Initial Requirements	Maintenance Requirement
Short stock sales below $3.00 per share	Not allowed	Greater of $2.50 a share or 100% of current market value
Short stock sales below $5.00 per share	Same as maintenance requirement	Greater of $2.50 a share or 100% of current market value
Short stock sales above $5.00 per share	Greater of $5.00 a share or 50% of current market value	Greater of $5.00 a share or 30% of current market value

Leveraged Long ETF Transactions
Equities	Initial Requirements	Maintenance Requirement
Leveraged 2x	50%	50%
Leveraged 3x	75%	75%
$2.99 and below	100%	100%

Leveraged Short ETF Transactions
Equities	Initial Requirements	Maintenance Requirement
Leveraged 2x and above $5.00	Same as maintenance	Greater of $5.00 a share or 60% of current market value
Leveraged 3x and above $5.00	Same as maintenance	Greater of $5.00 a share or 90% of current market value
Short sales below $5.00	Same as maintenance	Greater of $2.50 a share 100% of current market value
Short sales below $3.00	No allowed	Greater of $2.50 a share or 100% current market value

Concentrated positions on margin will hold the following requirements:

If the Percentage of Net Absolute Value is greater than 50%, the requirement is 50%.
If the Percentage of Net Absolute Value is between 35% and 49.99%, the requirement is 40%.
If the Percentage of Net Absolute Value is between 25% and 35%, the requirement is 35%.

Note: Percentage of Net Absolute Value = The absolute value of a single marginable position held in a margin account, then divided by the sum of the absolute value of all marginable equities (not including bonds and mutual funds) in a margin account.

Initial Requirements for Options

Covered Calls: Requires a long stock position equal to the amount of exercisable calls.
Debit Spreads: $2,000 minimum equity plus 100% of the debit amount, upon initiating the transaction.
Credit Spreads: $2,000 minimum equity plus 100% of the difference between the strike prices, multiplied by the number of contracts.

Marginable Option Transactions
Option Type	Initial Requirement	Maintenance Requirement
Naked Puts	30% of current market value minus out-of-money amount or 15% of strike, whichever is greater times the multiplier times the quantity	30% of current market value minus out-of-money amount or 15% of strike, whichever is greater times the multiplier times the quantity plus the market value of the option
Naked Calls	30% of current market value minus out-of-money amount or 15% of current market value, whichever is greater times the multiplier times the quantity	30% of current market value minus out-of-money amount or 15% of current market value, whichever is greater times the multiplier times the quantity plus the market value of the option

Note: A minimum of $0.50/share (1 contract = 100 shares) will be held for any naked calls or puts. Position limits are 2,000 contracts when going short and uncovered. The long position limits are determined by the exchange.

Short Option Day Trades

Short option day trades executed by pattern day traders (PDT) will be subject to naked requirements unless an intraday hedge exists. If the option is classified as “hedged” or “strategy,” the greater of the net premium of the strategy requirement will be charged.

The following strategies qualify as an intraday hedge for the purpose of day trade calculations:

Debit spreads
Credit spreads
Box spreads
Long and short butterflies including calendar butterflies
Calendar spreads
Condors including calendar condors
Long and short iron butterflied including calendars
Covered calls and puts

Money market funds are not applied towards calculating day trade buying power. Please contact us to have money market funds journaled to the margin type prior to the effective date if you would like to use all funds to calculate day trade buying power. Also, please note it is necessary to shut off sweeps to money market upon trade settlement in order to use all available funds to day trade without interruption. This request must be in writing with a signature.

Margin Risks

We are furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by your broker. Consult your broker regarding any questions or concerns you may have with your margin accounts.

When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firm’s collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and as a result, the firm can take action, such as issue a margin call and/or sell securities in your account, in order to maintain the required equity in the account.

It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:

You can lose more funds than you deposit in the margin account. A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities in your account.
The firm can force the sale of securities in your account. If the equity in your account falls below the maintenance margin requirements under the law, or the firm’s higher “house” requirements, the firm can sell the securities in your account to cover the margin deficiency. You also will be responsible for any shortfall in the account after such a sale.
The firm can sell your securities without contacting you. Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interest, including immediately selling the securities without notice to the customer.
You are not entitled to choose which security in your margin account is liquidated or sold to meet a margin call. Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.
The firm can increase its “house” maintenance margin requirement at any time and is not required to provide you advance written notice. These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account.
You are not entitled to an extension of time on a margin call. While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
The IRS requires Broker Dealers to treat dividend payments on loaned securities positions as a “substitute payment” in lieu of a dividend. A substitute payment is not, a “qualified dividend” and is taxed as ordinary income.
Industry regulations may limit, in whole or in part, your ability to exercise voting rights of securities that have been lent or pledged to others. You may receive proxy materials indicating voting rights for a fewer number of shares than are in your account, or you may not receive any proxy materials.

Click here for some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Contact Regal Discount Securities regarding any questions or concerns you may have about margin accounts.

Revised July 28, 2011