SEC approves plan to remove day-trading limit for small investors
The U.S. Securities and Exchange Commission (SEC) on Tuesday approved a plan from the Financial Industry Regulatory Authority (FINRA) to overhaul restrictions on small-investor day trading. The SEC issued a notice allowing FINRA to move forward with eliminating the Pattern Day Trader rules, which limit traders with less than $25,000 in a margin account to no more than four day trades in a five-day period.
FINRA’s new approach replaces those limits with updated margin standards requiring traders to maintain enough equity in their accounts to cover current risk levels, and these standards will apply to all investors. FINRA, Wall Street’s independent brokerage regulator, first proposed the broader changes in late 2025 as part of an effort to modernize trading rules.
The Pattern Day Trader rules date back to the dot-com era and are now considered outdated by FINRA. The SEC said public feedback, including from individual investors, “overwhelmingly supported” the proposal. The plan also includes a 12-month transition period during which traders can choose between the old and new standards.
