Regulation T: Credit by Brokers and Dealers
Chapters in this video
- 0:00 Meet Cora, Rita, Sam: Reg T cast and credit basics
- 1:32 T plus 3: the payment period formula vs. T+1 settlement
- 3:10 Freeriding and the 90-day cash-account freeze penalty
- 4:45 Good-faith-payment exception and freeze mechanics
- 5:42 Mutual funds, margin, and the Series 6 product restriction
- 6:47 Rapid-fire Reg T exam recap
What this video covers
- The Regulation T (Reg T) payment period formula under a T+1 settlement cycle: T+3, meaning settlement plus two business days
- When and how a broker-dealer must cancel or liquidate a purchase if the customer misses the payment deadline
- The $1,000 disregard exception that allows a firm to skip liquidation for small unpaid balances
- What freeriding is: buying a security in a cash account and selling it before paying for the original purchase
- Why a 90-day cash-account freeze does NOT close the account, and what trading restrictions actually apply during the freeze period
- The good-faith-payment exception that can prevent the 90-day freeze from attaching
- Why Series 6 representatives cannot open or recommend margin accounts, and the 30-day holding period for mutual fund margin collateral
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. The complete Series 6 course also includes adaptive practice questions and spaced-repetition flashcards.