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About

Margin is one of those topics where 80% of retail traders operate on folk wisdom and the other 20% operate on prime-brokerage intuition that doesn't quite apply to their retail account. This post is the practitioner's map. We'll cover:

The two margin frameworks every U.S. retail trader lives under — Reg T and Portfolio Margin (PM) — and the mechanics of each
A side-by-side summary of the key differences
How each framework can hurt you in ways the other can't
Who each framework is actually best for
How Interactive Brokers (IBKR) implements all of this differently from other brokers
A glossary of the IBKR-specific metrics that actually matter (NLV, ELV, SMA, SEM, Excess Liquidity)
Short selling mechanics — borrow, SYEP, rebates — where IBKR is the unique retail player

Heads up on a regulatory change: As of April 14, 2026, the SEC approved FINRA's elimination of the Pattern Day Trader rule and its $25,000 minimum. The new framework, effective June 4, 2026 with an 18-month phase-in through October 20, 2027, replaces trade-counting with real-time intraday margin standards calibrated to actual position risk. The PDT threshold is going away — but the intraday exposure monitoring it's being replaced with is, if anything, closer to the IBKR model. The post reflects the new world.

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Part I: The Two Frameworks

Every U.S. retail margin account runs on one of two rule sets. They differ in what they measure (fixed strategy formulas vs. scenario-based stress) and in how much leverage they hand you.

Reg T: rules-based, predictable, blunt

Portfolio Margin: scenario-based, risk-aware, intricate

Part II: The Key Differences, Side by Side

Dimension	Reg T	Portfolio Margin
Governing model	Fixed % per strategy template	OCC TIMS scenario stress
Account minimum	$2,000 (uncovered options)	$110K open / $100K maintain
Stock leverage (overnight)	2:1	~6.7:1 diversified / ~12.5:1 high-cap index
Sees your whole book?	No — each strategy in isolation	Yes — per underlying, with cross-product offsets
Rewards hedging?	Barely — only via recognized spread templates	Yes — hedges collapse worst-case loss
Single-stock diversification?	Each naked position margined independently	Still 0% offset between names
Init vs. Maintenance	Identical for options	Init = 110% of maintenance
IRAs eligible?	Yes	No
SMA applies?	Yes — EOD Reg T check	Yes, on incremental trades
Intraday PDT threshold	$25K (being eliminated June 4, 2026)	$25K (same, being eliminated)

What the table is actually telling you

Reg T is blunt. It doesn't know the difference between an iron condor on SPY and a naked short call on a meme stock — it has a formula for each and applies it. This is a feature if you're running simple strategies and don't want to think about correlation. It's a bug if you're running a book where hedges do most of the work.

PM is risk-aware, but only within the boundaries TIMS understands. It's generous to hedged books. It's punitive to concentrated single-name books (because of the 0% cross-name offset, a fact that catches a lot of people). It treats broad-based indexes very kindly (8% down / 6% up stress) because those markets have deep history and institutional hedging infrastructure.