Margin
Lightspeed services the following account types:
Pattern Day Trader (PDT): A pattern day-trader is defined as someone who effects 4 or more Day Trades within a 5-business-day period. A day trade is defined as any trade pair wherein a position in a security (stock, single-stock future, bond or stock option) is increased (”opened”) and thereafter decreased (”closed”) within the same trading session. PDT accounts can receive intra-day leverage of 4 times their maintenance excess. To open a new PDT account Lightspeed requires a minimum initial deposit of $27,500.
Regular Margin: Margin accounts are eligible to receive leverage of two times their maintenance excess for both intra-day and overnight trading. Margin accounts are limited to three or fewer day trades in a 5-business-day period. A trader who executes 4 or more day trades in this time is deemed to be exhibiting a ‘pattern’ of day trading and will thereafter be subject to the PDT restrictions. To open a new margin account Lightspeed requires a minimum initial deposit of $10,000.
Portfolio Margin: Geared towards sophisticated, risk-aware hedge funds and high-net worth individuals, portfolio margin permits eligible customers to use a portfolio- or risk-based method when calculating risk across a diversified investment portfolio, thereby more accurately reflecting the actual risk of the positions within the portfolio and, as a result, potentially increasing a customer’s leverage. Currently, portfolio margining is available for U.S equities and equity options only. Call a Lightspeed Relationship Manager for minimum funding requirements. For additional information click here.
Cash and IRA: Cash accounts must pay for all their trades in full at the time the trade is made. Sale proceeds in a cash account are credited only when the transaction has settled. Additionally, cash accounts may not open short positions. To open a new cash or IRA account Lightspeed requires a minimum initial deposit of $10,000.
Margin Requirements and Margin Calls:
Equity Maintenance (EM) Call: Pattern day trading (PDT) accounts are required to have a minimum equity of $25,000 at the beginning of each trading session. Accounts which fall below the $25,000 minimum will be issued an EM call and will be restricted to liquidating transactions only. EM calls can be met by deposit of new funds or by the appreciation of positions in the account.
Day Trading (DT) Call: Accounts which exceed their 4 to 1 intra-day buying power at any point during the trading session will be issued a DT call. Accounts with outstanding DT calls will be restricted to liquidating transactions only. A DT call can be met by depositing new funds which must remain in the account for a minimum of two business days. A DT call is considered met the day AFTER the funds have been received by its clearing firm.
Regular Maintenance (RM) Call: Customers are required to maintain overnight maintenance margin of 25% on long positions and 30% of short positions (higher requirements apply to low priced and concentrated security positions, see table below). If the equity maintenance percentage falls below the required levels, a RM call will be issued. Customers have 3 business days to meet the call (1 business day if the equity percentage falls below 20%). The call can be met by deposit of funds or marginable securities or by liquidation of positions. Customers who fail to meet a RM call in a timely manner will be subject to liquidation by Lightspeed or its clearing firm.
Concentrated Maintenance (CM) Call: Customers are required to maintain overnight maintenance margin of 40% on any position which makes up more than 50% of the total market value of all positions in the account. If the equity maintenance percentage on a concentrated position falls below the required level a CM call will be issued. Customers have 3 business days to meet the call. The call can be met by deposit of funds or marginable securities or by liquidation of positions. Customers who fail to meet a CM call in a timely manner will be subject to liquidation by Lightspeed or its clearing firm.
Regulation-T (RT) Call: The Federal Reserve Board issued Regulation-T which allows a brokerage firm to lend up to 50% of the purchase price of a security to a customer. The customer is required to pay the minimum of the other 50% from excess funds in their account. In practice, this gives customers up to 2 to 1 overnight leverage. Customers who are unable to provide 50% of the purchase price of a security on the day of the purchase (or short sale) will be issued a RT call. Customers have 5 business days to meet a RT call. The call can be met by deposit of funds or marginable securities or by liquidation of positions. Customers who fail to meet a RT call in a timely manner will be subject to liquidation by Lightspeed or its clearing firm.
Additional Margin Guidance:
The table below shows initial (at the time of a trade) and maintenance (when holding positions) margin requirements:
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Real-time Initial and Maintenance Margin Requirement |
Overnight Reg T Initial Requirement |
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Long Marginable Positions: |
Long Marginable Positions: |
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Short Marginable Positions: |
Short Marginable Positions: |
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Non-Marginable Long or Short Positions: |
Non-Marginable Long or Short Positions: |
1. For liquid and listed stock – we will margin securities at or above a price of $1.50 for overnight/maintenance release.
2. The clearing firm will issue a strike for customers who have past due Regulation T calls. On the 3rd strike the account is restricted, and on the 4th strike the account is closed and limited to liquidating trades only (the restrictions/closures are for 90 day periods and limited to 2 strikes within a 1-year time span without penalty). Restrictions – any calls issued during this time frame must be met in 24 hrs. Closures – limit customer to liquidating trades only.
3. The clearing firm will not allow same-day liquidations in accounts which have simultaneous Regulation T and Regular Maintenance calls. These calls must be met on separate days, with the liquidations satisfying the RM call first and the RT call second. Liquidations for both a RT and RM call on the same day will result in the customer’s account incurring a strike.
4. Customers can request to take an earlier strike to use same day liquidations to cover both Regular Maintenance and Regulation T calls.
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