What is an RT call?

Regulation T stipulates that an investor may borrow up to 50% of the purchase price of securities from a broker. A Reg T (or RT) call occurs when there aren't enough funds in an account to cover the 50% initial requirement.

This means you cannot hold a position overnight exceeding your overnight buying power (ONBP). Let’s look at two scenarios.

Let’s say you have $10,000 of DTBP (4x leverage of your own funds) and $5,000 of ONBP (2x leverage of your own funds).

1. You choose to buy $6,000 worth of Stock A using your DTBP. In this case, you’ll have to liquidate at least $1,000 worth of Stock A in the day because you can only hold $5,000 overnight. You can see the risk reminder before you confirm your order.
2. You choose to buy $5,000 worth of Stock A and hold this position for a few days. If the price of stock A slides, the borrowed amount ($2,500) would not change, but your own funds would decrease below $2,500. An RT call occurs.

What happens if you get an RT call?

1. You will not be able to open new positions while in an RT Call.
2. After receiving 3 RT calls in 90 days, your maximum Day Trade Buying Power factor will be reduced to 2 times.
3. If the call is not met before the due date, a forced liquidation will be performed to satisfy the call.

How do you lift an RT call?

To lift an RT call, you can either:

• Make a deposit of the call amount
• Liquidate 2 times of the call amount
• Transfer marginable securities from an external account

The call will be removed 1-2 business days after the required action. If you have multiple calls that are outstanding, each call must be met separately.

How do you avoid RT call?

• If you’re using your DTBP to trade, do not forget to liquidate before 8:00 pm EST.
• Prepare for price fluctuations and do not use all your ONBP.
• Place stop loss orders to protect your position.