Day traders rejoice! The regulation that restricted active retail traders in the U.S. is in the process of being removed.
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The Financial Industry Regulatory Authority has approved an amendment that removes one of the most controversial barriers to day trading in America — the requirement that people maintain a minimum account balance of $25,000 in a margin account to execute four or more trades within a five-business-day period.
The $25,000 minimum account balance is extremely controversial among individual retail investors and is frequently complained about on online message boards and social media. But now, the change underway will make active day trading more accessible to investors with smaller account balances and less money to play with in the market.
The proposed change still requires approval from the U.S. Securities and Exchange Commission (SEC).
Trading Platforms
If the change is approved by the SEC, it is expected to be a boon to online trading platforms such as Robinhood Markets (HOOD), Coinbase Global (COIN), and Interactive Brokers (IBKR), which make more money the more their clients buy and sell stocks. The rule change is also expected to boost options trading on the platforms.
The rule mandating the minimum $25,000 margin account balance was put in place in 2001 during the dot-com crash when regulators were fearful that small traders were taking excessive risks in a volatile market. The Financial Industry Regulatory Authority said it’s time to get rid of the minimum balance requirement to reflect how markets have evolved over the past 20 years.
Is HOOD Stock a Buy?
The stock of Robinhood Markets has a consensus Moderate Buy rating among 18 Wall Street analysts. That rating is based on 12 Buy and six Hold ratings issued in the last three months. The average HOOD price target of $127.06 implies 0.18% upside from current levels.
Read more analyst ratings on HOOD stock