SEC Day-Trading Rule Change Lowers Entry Barrier for Small Accounts

Smaller-sized accounts can now trade more actively. The SEC approved a FINRA proposal to amend and remove pattern day trading rules, removing the requirement for traders to hold $25,000 in equity if they are flagged as pattern day traders. This replaces the $25,000 equity minimums with intraday margin requirements. Because this reduces margin requirements for traders, retail trading volumes in equities are expected to increase. Brokers including Interactive Brokers and eToro will see increased volume, but the effect is most significant for Robinhood, which maintains smaller average account sizes and primarily U.S. exposure.