finance
SEC Approves Elimination of $25,000 Pattern Day Trader Equity Requirement, Effective June 4
The U.S. Securities and Exchange Commission has approved a proposal to eliminate the pattern day trader rule, replacing it with a flexible intraday margin rule. This change follows a FINRA proposal and coincides with surges in meme stocks like Allbirds and Avis Budget Group. Shares of both companies saw sharp gains and reversals amid increased retail trading activity.
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U.S. Securities and Exchange Commission approved a proposal to eliminate the pattern day trader rule, which required traders executing four or more day trades within five business days to maintain a minimum equity of $25,000 in a margin account. The new rule replaces the $25,000 requirement with a more flexible intraday margin rule and goes into effect on June 4.
FINRA proposed the rule change and called the old pattern day trader rule outdated, noting it was hatched in the wake of the Dotcom crash. Traders worked on the floor of the New York Stock Exchange at the opening bell in New York on April 20, 2026. 50 after the company outlined plans to rebrand as NewBird AI and pivot toward compute infrastructure.
Allbirds slapped an artificial intelligence label on its business, and the stock recently changed hands near $8. Avis Budget Group shares, ticker CAR, soared from under $100 last month to a record high near $850 in early trading on Wednesday. The shares then staged a sharp intraday U-turn lower after reaching the record high.
Analysts at JPMorgan said crowding in so-called meme stocks has surged, approaching levels just shy of the extremes seen during the post-Liberation Day risk chase. U.S. Adam Cohn, head of trading operations at TradeStation, said the change opens the door for more investors with smaller accounts to trade more actively, while still keeping protections in place through modern margin and risk controls.
Cohn added that removing that barrier means more people can participate in short-term trading strategies, leading to a more open market with broader participation and more liquidity. CNBC reported that April's rally in risk assets, fueled in part by an Iran ceasefire, has emboldened individual investors to pile back into volatile trades.
