Types of Accounts

What this video covers

• How free-riding works in a cash account: the exact three-step sequence that violates Regulation T and triggers a 90-day freeze (still allows trading, but only with settled cash upfront)
• Why a pattern day trader needs BOTH the 4-or-more day trades in 5 business days threshold AND the greater than 6% of total trades condition to be classified
• The legacy framework numbers that remain testable: $25,000 minimum equity (cash plus eligible securities), 4x day-trading buying power versus standard 2x margin, and the 5-business-day margin call deadline
• What a prime brokerage account provides (custody, clearing, financing, consolidated reporting, securities lending) and why institutional clients use a single margin relationship for lower borrowing costs
• How DVP (delivery versus payment) protects institutional buyers and RVP (receive versus payment) protects institutional sellers by eliminating principal risk through simultaneous exchange
• Why DVP/RVP assets are custodied at a third-party bank, not the broker-dealer, and why account statements show no cash or positions
• When a fee-based account (percentage of assets under management, or AUM) is suitable for active traders versus when a commission-based account is required for buy-and-hold customers under Regulation Best Interest (Reg BI)