Regulation T (Reg T)

Regulation T, also known as Reg T, encompasses a set of rules established by the Federal Reserve Board in 1974 to mitigate risk in securities transactions. It enables securities dealers to extend credit to their clients while regulating margin requirements and margin trading. According to Reg T, traders can receive up to 50% of a trade’s value through margin provided by their broker. This mechanism aims to manage the risks associated with leveraged trading and limit investors’ total buying power.