House Maintenance Requirement
Candlefocus EditorBrokerages may require higher levels than the Reg T minimum, usually ranging from 30% to 50%. This is important for them to ensure a higher level of security; it encourages clients to maintain a reasonable balance in their accounts so that their investments are not at too much risk of default. Brokerages generally set these requirements higher to ensure their clients are more actively engaging in their investments and will protect their interests in the event of market losses.
Large or more sophisticated clients may have lower house maintenance requirements than the general public. This is due to the higher levels of understanding or larger amounts of capital, which can be provided as security in the event of market losses. However, even for these clients, the minimum 25% level stipulated by Regulation T is never disregarded.
House maintenance requirements are an integral part of investing with a brokerage, and the minimum set by Reg T is rarely neglected by brokerages. The requirements vary depending on the size and sophistication of the client, with larger and more experienced clients typically having looser maintenance requirements. However, even for these clients, the minimum 25% level is still applicable, and brokerages ensure they keep their accounts at or above these figures to protect their client's investments.