How is Buying Power computed?
Generally computed by taking “Available Funds” and dividing it by some factor. Normally this is 0.3501 (or 0.30 or even as low as 0.25 which is the mandated federal minimum)) as the factor as applied to “House Surplus Available Funds.” i.e. if you had $100,000 of House Surplus available funds at the beginning of the day, then 100,000/.3501 equals $285,632.67 of Buying Power for the day. Otherwise 0.50 is the factor as applied to “SMA Available Funds” if this computes a lower number. i.e. if you had $100,000 of SMA available funds at the beginning of the day, then 100,000/.50 equals $200,000 of Buying Power for the day. Since $200,000 is less than $285,632.67, your Buying Power would be throttled back or limited to the lower $200,000 number. Non-marginable securities, such as stock options, have buying power of “Available Funds” less any “Pending Cash Deposits.
