How the number is actually produced. Rule 4210(g)(8) groups long and short positions by security class into what the rule calls a portfolio, categorizes each portfolio by type, and computes theoretical gains and losses at ten equidistant valuation points across an assumed market move using a theoretical pricing model the SEC has approved. Gains and losses may be netted fully within a portfolio, offsets between portfolios in the same product group are then applied as the net capital rule permits, and the sum of the greatest loss from each portfolio is the account's requirement. Rule 4210(g)(7) states the result: the margin required is the greater of "the amount for any of the ten equidistant valuation points representing the largest theoretical loss," or "$.375 for each listed option, unlisted derivative, security future product, and related instrument, multiplied by the contract's or instrument's multiplier," capped at market value for long contracts.
The size of the assumed move depends on what is being margined, and the spread between the three categories is where most of the difference from ordinary margin comes from. Rule 4210(g)(2)(F) sets the range at plus 6 percent and minus 8 percent for a high-capitalization broad-based market index, plus or minus 10 percent for a non-high-capitalization broad-based market index, and plus or minus 15 percent for any other eligible product based on an equity security or a narrow-based index. A single stock is therefore stressed almost twice as hard as a broad index, which is the model encoding the ordinary observation that one company can fall further than the market.
Who may use it, and the widely repeated number that is not in the rule. Rule 4210(g)(4)(C) limits participation, for an ordinary customer, to a person "approved for uncovered options" under Rule 2360, and Rule 4210(g)(5)(B) repeats that only participants approved for uncovered short option contracts may use a portfolio margin account. The rule then imposes a minimum equity of "at least $5 million" on such a participant, but only as a condition of establishing or maintaining positions in unlisted derivatives. That $5 million is the sole account-level equity threshold in the whole of paragraph (g). The figures a reader is far more likely to have seen, $100,000 or $125,000 as the price of admission to portfolio margining, appear nowhere in the rule. They are house requirements set by individual brokerage firms, which Regulation T section 220.1(b)(2) expressly permits, and they vary by firm and can change. Treating them as a regulatory minimum gets both the source and the stability of the number wrong.
The rule shuts retirement accounts out by name. Paragraph (g) ends its opening passage with a single sentence: "the portfolio margin provisions of this Rule shall not apply to Individual Retirement Accounts ('IRAs')." There is no exception and no equity level that unlocks it.
The disclosure requirement is unusually specific, and it is a signal about the product. Rule 4210(g)(5)(C) requires the member, on or before the date of the first transaction in the account, to furnish "a special written disclosure statement describing the nature and risks of portfolio margining" with an acknowledgement for the account owners to sign, and to obtain that signed acknowledgement and record the date it was received. Very little in the margin rules carries a bespoke signed disclosure. That one does is worth reading as the regulator's own assessment of how easily this can be misunderstood.
What happens when the account falls short, which is where the trade-off bites. Under Rule 4210(g)(10), if equity is less than the margin required at the close, the participant has three business days to deposit funds or securities or to establish a hedge. After that the member may accept no new opening orders except those that reduce market risk, and if the deficiency is still not met the member "must liquidate positions in an amount sufficient to, at a minimum, lower the total margin required to an amount less than or equal to the account equity." A separate provision, Rule 4210(g)(9), handles the $5 million minimum for unlisted-derivative participants: three business days to restore it, then no new opening orders from the fourth business day. And the firm has its own constraint under Rule 4210(g)(12), which caps its aggregate portfolio margin requirements at ten times its net capital for more than three business days, so a firm under pressure may tighten on customers who are not.
The relationship to Regulation T is a carve-out, not a discount. Section 220.1(b)(3) of Regulation T says that the Part does not apply to, among other things, "financial relations between a customer and a creditor to the extent that they comply with a portfolio margining system under rules approved or amended by the SEC." The Federal Reserve's 50 percent initial requirement is therefore not being waived or reduced in a portfolio margin account; it simply does not reach it.
One 2026 change worth naming, because the older description is still circulating. The same FINRA amendments that replaced the day trading margin requirements added Rule 4210(g)(1)(J) and (g)(1)(K), which require a member's written risk-analysis methodology to cover determining and monitoring intraday risk in each portfolio margin account, and to require any portfolio margin account holding less than $5 million in equity to margin intraday risk substantially as it margins end-of-day risk. FINRA notes that this approach "preserves the $5 million threshold that currently applies under the portfolio margin provisions." Portfolio margin accounts are excluded from the separate intraday margin deficit regime that applies to ordinary margin accounts.
