-- Shares of retail brokers rallied on Wednesday after the US Securities and Exchange Commission approved a rule change that would eliminate the $25,000 minimum equity requirement for so-called "pattern day traders."
Under the original rule that dates back to 2001, pattern day traders, or investors who execute four or more day trades within five business days, were required to keep a minimum $25,000 equity in their margin accounts.
The Financial Industry Regulatory Authority, Wall Street's self-regulatory watchdog, had proposed a rule change to replace that restriction with intraday margin provisions reflecting investors' market exposure.
The SEC approved FINRA's proposal, according to a notice issued Tuesday.
Shares of retail brokerage Robinhood Markets (HOOD) rallied 10% on Wednesday, while Webull (BULL) jumped 11%. Interactive Brokers Group (IBKR) rose 3.4%.
The SEC notice must be published in the Federal Register to take effect, The Wall Street Journal reported.
The new framework allows investors to execute trades without frequency limits and redeploy capital throughout the same trading session, Webull said on Wednesday.
"The shift in intraday margin rules represents a meaningful evolution in how active traders can participate in the markets," Webull Group President Anthony Denier said in a statement.