U.S. stock trading regulations are being relaxed! The $25,000 threshold for intraday trading may be lifted.

U.S. regulators are taking steps to remove one of the most controversial barriers faced by active retail traders—the $25,000 minimum account equity rule required for frequent day trading.

The Financial Industry Regulatory Authority (FINRA) approved a proposal this week to replace this longstanding threshold, making it easier for small accounts to participate in active day trading. This change is still pending approval by the U.S. Securities and Exchange Commission (SEC).

The current $25,000 minimum equity rule requires traders to maintain at least a $25,000 balance in a margin account to conduct four or more day trades within five trading days. This regulation was first introduced in 2001 after the internet bubble burst, when regulators were concerned that traders with small funds would be exposed to excessive risk in highly volatile internet stocks.

FINRA will replace this with a new intraday margin rule, applying the existing maintenance margin requirements to intraday positions. In other words, investors' intraday buying power will be based on the margin requirements of their positions during the day, rather than relying on a fixed minimum account equity.

Regulators stated that this reform reflects the profound changes in technology and market access for retail trading since the rule was first introduced.

This adjustment to the rule may spur more options trading and boost trading activity for brokerages such as Robinhood. Following the news, Robinhood's shares reversed losses and rose by about 1% during trading on Wednesday.

Risk Disclosure and DisclaimerThe market involves risks, and investments should be made cautiously. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investing based on this is at your own risk.