Margin Lending

Margin lending allows you the flexibility to use your existing investment portfolio as collateral to purchase additional investments, sell securities short or as temporary coverage for funds due by settlement date, but not yet paid. Margin is not available for all account types such as IRA's and custodial accounts.

While the primary goal for most investors is borrowing to buy additional securities, you can also use these funds as a lending alternative for other purposes to be used at your discretion such as home improvements, education expenses or auto financing.

The current Broker's Call Rate is 2% and was last changed 12/19/2008.

Daily Average Debit Balance
Interest Rate
Margin Rate
Less than $49,999 5% 3% above Broker's Call Rate
$50,000-$99,999 4% 2% above Broker's Call Rate
$100,000-$249,999 3% 1% above Broker's Call Rate
$250,000+ 2.5% 0.50% above Broker's Call Rate

If you are considering the use of margin, you must fully understand the risks associated with using a margin account.

Open a Margin Account

If you already have a Regal account and are considering using margin, you must have sufficient buying power and eligible securities in your account as well as a completed Margin Account Agreement on file. Once a margin agreement is on file, you essentially are pre-approved to use your credit-line whenever you choose. By setting up a margin account, you have no obligation to borrow. Margin borrowing can be accessed at your convenience. Call 1-800-92-REGAL to determine the dollar value you can borrow against your investments as collateral.

Benefits of Margin

Convenience

Only a Regal brokerage account and a completed margin agreement are required. In order to use margin, you must also maintain at least $2,000 in equity in your account. You may request access to margin for your existing brokerage account or when applying for a new account.

Flexibility

There is no set payment schedule as long as you maintain the required equity maintenance amount in your account. The interest on the loan, based on the average daily debit balance in your account, is added to your margin balance monthly.

Accessiblility

By setting up a margin account, you have no obligation to borrow. Margin borrowing is accessible at your convenience once your margin account is approved. To access, simply place a trade or for added flexibility, withdraw funds using an Regal Visa® debit card or check (enrollment in cash management services required). If borrowing for short-term cash purposes, in most cases you can receive funds the following business day after your initial request.

If the securities in your account decline in value, so does the value of the collateral supporting your loan, which could result in a margin call and/or selling securities in your account(s). It is important that you fully understand the risks involved in trading securities on margin. Click here for the risks involved with trading securities in a margin account. If you are considering the use of margin, you must fully understand the risks associated with using a margin account.

Margin Guidelines

Regulations dictate the amount of cash or equity that must be deposited and maintained as collateral against your margin loan. The amount you can borrow on margin toward the purchase of securities or for personal use is typically limited to 50% of the value of marginable securities in your account. However, the market price of the security must generally be above $3.00 per share and may not be a pink sheet or bulletin board stock.

Your buying power and cash available may fluctuate with the value of your securities from day to day. Margin is available, subject to approval, on most brokerage accounts with the exception of IRAs and Custodial accounts.

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. To open an Regal 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.

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 $25,000
  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.

Marginable Option Transactions
Option Type Initial Requirement Maintenance Requirement
Naked Puts 20% of current market value minus out-of-money amount or 10% of strike, whichever is greater times the multiplier times the quantity 20% of current market value minus out-of-money amount or 10% of strike, whichever is greater times the multiplier times the quantity plus the market value of the option
Naked Calls 20% of current market value minus out-of-money amount or 10% of current market value, whichever is greater times the multiplier times the quantity 20% of current market value minus out-of-money amount or 10% of current market value, whichever is greater times the multiplier times the quantity plus the market value of the option

Option Expirations Policy

Expiring long and short option positions may be closed as early as 3:00 PM EST on the last trading day prior to expiration if you do not have the funds or buying power to buy or short the underlying security. Please note that you may still get assigned even if a short option is out of the money. Therefore, if there is risk to the account, short options may be closed out even if it is out of the money. The firm may close out your positions without prior notice. We may also elect not to exercise or close the resulting stock position in the aftermarket hours on Friday or pre-market hours on Monday.

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:

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 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 35% of current market value
Leveraged Long ETF Transactions
Equities Initial Requirements Maintenance Requirement
Leveraged 2x 60% 60%
Leveraged 3x 90% 90%
$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 70% of current market value
Leveraged 3x and above $5.00 Same as maintenance 100%
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 requirement:

Margin accounts with any concentrated single position comprising more than 50% of the account value will be charged 40% on the entire account.

Initial Requirements for Options

Important Guidelines