Robinhood Markets (NASDAQ:HOOD) shares jumped 6% on Wednesday, adding to a 10% gain in the previous session after the U.S. Securities and Exchange Commission approved changes to long-standing day-trading restrictions.
The SEC on Tuesday cleared a broad overhaul of rules governing retail day trading, a move that has been welcomed by online brokerage platforms. Shares of Webull also rose 6% following the announcement.
The changes stem from a proposal by the Financial Industry Regulatory Authority to revise the pattern day trader rule, which currently limits traders with less than $25,000 in their margin accounts to no more than four day trades within a five-day period.
Under the revised framework, margin requirements will instead focus on ensuring that investors maintain enough equity to cover their real-time risk exposure. These updated standards will apply across all accounts, rather than targeting smaller investors specifically.
Public feedback “overwhelmingly supported” the proposal, which includes the “elimination of the $25,000 minimum equity requirements and definition of pattern day trader,” SEC Assistant Secretary Sherry Haywood said in an official order.
The regulatory shift is expected to benefit retail brokerage firms like Robinhood and Webull by potentially boosting trading volumes among smaller investors who were previously constrained by the $25,000 threshold. The pattern day trader rule had been in place for years as a safeguard against excessive risk-taking in margin accounts, though it had increasingly been criticized as outdated and overly restrictive.