Buying power is granted in a margin account in accord with a variety of exchange and house rules and the availability of buying power may depend on the type of security, or securities held in your account.

Buying Power Calculations

Alternative 1:  Reg T Excess divided by 0.50
Alternative 2:  House Excess divided by 0.30

These calculations are performed after the close of the market and the lesser of the two numbers is displayed in your online account overview as “Buying Power”.  This figure is more specifically thought of as “overnight buying power” because the calculations are applicable to positions held “overnight” in a margin account.  There are additional rules for day trading accounts, including different buying power calculations. For information about Day Trading Buying Power, see the Day Trading section of this handbook on page7.

While the relationship between a $1 deposit and $2 of buying power is generally simple, in practice there are situations where calculations other than the two above are to be used to determine buying power. This means that there are certain conditions in which the buying power displayed in your online account information may be overstated.