Regulation T (Reg T)

Reg T is a Federal Reserve Board provision which regulates the amount of credit a brokerage can extend to its customers to purchase securities. According to Reg T, a broker can only loan cash up to 50% of the value of a customer’s purchase.

Therefore, when placing a buy order, at least 50% of the value of the order must be funded by customer cash. A Reg T call can occur if a purchase is made with insufficient customer cash.