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What is a day trade call?

Even with accounts valued above US$25,000, FINRA’s rules limit the value customers can use to day trade. This limit is called day trading buying power. If a customer exceeds this limit, a day trade call (aka margin call) will be issued. 

When you receive a 'day trade call' via email, you will need to deposit the necessary amount to restore your day trade buying power. 

This is how this limit is calculated by our U.S. broker-dealer:

Exchange               =    Market value (stocks)   x     25%
requirement

Exchange               =    Equity (stocks + cash)  -  Exchange requirement
margin excess

Day trade             =    4     x     Exchange margin excess
Buying power 

Day Trade Call Definitions

Your day-trading buying power is equal to four times the excess of the exchange margin i.e. 4 x the Exchange margin excess:

The Exchange requirement is equal to the Market value (stocks) of your portfolio x 25%

The Exchange margin excess is calculated by the Equity (value of stocks plus cash in your portfolio) minus the exchange requirement

Therefore, Day-trading buying power is equal to four times the Exchange margin excess buying power (4 x exchange margin excess). 

What happens if you exceed this limit?  

If this limit is exceeded and a day trade call is issued, Stake will notify the customer that they have up to five business days to deposit funds to meet the call. 

Until the call is met, the account will be restricted to a day trading buying power of 2x the exchange margin excess. If the day trade call is not met by the deadline, the account will be further restricted to the exchange margin excess.     

If a customer has an unmet call and receives a second day trade call, the account is restricted and they will not be allowed to place any further day trades for the following 90 days or until the calls are met.     

This restriction only prevents customers from making day trades (as defined above). Apart from that, the account can still be used for non-day trades.      

Some things to consider:    

Day trade calls and Pattern Day Trade restrictions are different, but both are very important for day trading and are imposed by FINRA, not Stake. Those marked as Pattern Day Traders could face more limitations than the 90-day trade restriction, at the discretion of our U.S. broker-dealer, DriveWealth.   

Margin requirements are calculated based on the customer’s securities positions at the close of the trading day. A customer who only day trades and does not have a security position at the end of the day still has generated financial risk throughout the day. These rules impose a margin requirement for day trading calculated based on the customer’s largest open position during the day.     

DriveWealth is free to impose a higher equity requirement than the minimum specified in the rules. The rules also prohibit the use of cross-guarantees to meet any of the day-trading margin requirements. 

For more information, please access the FINRA website or contact us here.