If a Portfolio Margin customer only trades long/short equities in its account, with no listed option positions, is the account subject to a margin requirement of 15 percent?
The long/short positions will be subject to a valuation point range of +/- 15 percent. However, the customer will be expected to possess a certain level of sophistication, evidenced by approval to sell uncovered options, and a disclosure statement with a signed acknowledgement from the customer. In addition, the member firm is expected to have risk monitoring capabilities that include the imposition of higher “house” requirements as well as various stress testing scenarios and the ability to monitor concentrations of individual securities in a single account. FINRA strongly urges firms to establish higher house requirements for more volatile stocks, concentrated positions and low priced securities. FINRA has not prescribed stress testing levels, but expects firms at a minimum to conduct stresses up and down 25 percent.
Related Questions
- If a Portfolio Margin customer only trades long/short equities in its account, with no listed option positions, is the account subject to a margin requirement of 15 percent?
- When multiple trades are executed for the same customer account on the same trade date, what information is required for the amount, quantity and issue symbol/CUSIP fields?
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