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Investing.com-- The U.S. Securities and Exchange Commission on Tuesday approved a plan to overhaul restrictions on day-trading activity by small investors that was put forward by the Financial Industry Regulatory Authority.
The SEC issued a notice allowing FINRA to proceed with the elimination of Pattern Day Trader rules, which restrict a trader from making more than four day traders in a five-day period if they held less than $25,000 in their margin account.
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FINRA proposed new margin standards which will require traders to have enough equity in their account to cover current risks– standards that will now apply to all investors.
FINRA– Wall Street’s independent brokerage regulator– had in late-2025 proposed sweeping changes to day trader regulations, in a bid to modernize regulations.
Pattern day trader requirements were established around the dot-com era, with FINRA viewing these regulations as now being outdated.
The SEC said in its notice that public feedback, including individual investors, “overwhelmingly supported” the proposal.
The FINRA proposal puts forward a 12-month transition period during which traders can choose between which trading standards they want.
