Match each initial margin account transaction scenario to its exact regulatory deposit req… — FINRA SIE (Securities Industry Essentials)

Match each initial margin account transaction scenario to its exact regulatory deposit requirement under Regulation T and FINRA rules.

Short sale of 100 shares of a marginable stock at $1.50 per share in a new account $250 total equity deposit ($ 2.50 per share)
Long purchase of 100 shares of a marginable stock at $15 per share in a new account$1,500 total equity deposit (100% of transaction value)
Short sale of 200 shares of a marginable stock at $7 per share in a new account$2,000 total equity deposit (FINRA minimum initial requirement)
Long purchase of 100 shares of a marginable stock at $50 per share in a new account$2,500 total equity deposit (50% Regulation T requirement)

The matching pairs are: 1) Short sale of 100 shares at

1.50 matches

250 total equity deposit (

2.50 per share); 2) Long purchase of 100 shares at

15 matches

1,500 total equity deposit (100% of transaction value); 3) Short sale of 200 shares at

7 matches

2,000 total equity deposit (FINRA minimum initial requirement); 4) Long purchase of 100 shares at

50 matches $2,500 total equity deposit (50% Regulation T requirement).

Each scenario matches its mandatory initial margin deposit requirement: short positions under

2.50 per share require

2.50 per share (

250); long purchases under

2,000 require full payment (100% or

1,500); short sales resulting in trade values under

4,000 still require the

2,000 FINRA initial minimum; and trades where 50% Reg T exceeds

2,000 require the full 50% Reg T amount ($2,500).

Evaluate the short sale of low-priced stock ($1.50/share).

FINRA low-priced short sale minimum applies:

2.50 per share for stock under

2.50.

100 shares ×

2.50/share =

250 total required equity.

Evaluate the long purchase under

2,000 total value (

1,500 total).

FINRA 100% full-payment rule applies for long positions under $2,000.

Because

1,500 is less than

2,000, the investor must pay $1,500 in full.

Evaluate the short sale of

1,400 total value (

7/share × 200 shares).

FINRA $2,000 minimum initial equity requirement applies.

Although Reg T 50% is only

700, FINRA rules dictate a minimum initial equity of

2,000 for establishing a short margin account position.

Evaluate the long purchase of

5,000 total value (

50/share × 100 shares).

50% Regulation T requirement applies.

50% of

5,000 =

2,500, which is greater than the FINRA $2,000 minimum.

Initial Margin Requirements and FINRA Minimum Equity Deposit Rules

Question