Financial Industry Regulatory Authority Board approves intraday margin replacement for pattern day trading rules and advances FINRA Forward modernization proposals

The Financial Industry Regulatory Authority’s Board of Governors approved amendments to replace the day trading and pattern day trading rules, including the USD 25,000 minimum equity requirement for pattern day traders, with an intraday margin rule that applies existing maintenance margin rules to intraday exposure. The Board also advanced four FINRA Forward rule modernization proposals for filing with the Securities and Exchange Commission and received updates on the Consolidated Audit Trail and FINRA’s cybersecurity program. The pattern day trading changes follow a retrospective review assessing whether the current rules should be adapted to technological and trading developments, and the proposal reflects feedback from member firms, industry groups and investors. The four modernization proposals cover amendments to corporate financing rules, a revised approach to outside activities requirements, a gifts proposal that would raise the gift limit from USD 250 to USD 300, and changes to Capital Acquisition Broker rules to allow CABs to represent buyers as well as sellers in specified private placement and M&A transactions. The Board also discussed a forthcoming Regulatory Notice intended to reduce burdens and consolidate prior guidance on using negative consent for bulk transfers or assignments of customer accounts. The intraday margin proposal will be filed with the SEC for approval, and the four FINRA Forward proposals have been or will be filed with the SEC. FINRA scheduled its next Board meeting for December.