Overview

• The Pattern Day Trading (PDT) rule applies only to the U.S. market and does not apply to Singapore or Hong Kong markets.
• Under FINRA regulations, a pattern day trader is any trader who executes four or more day trades within five business days, provided these trades make up more than 6% of the trader’s total trades during that period. A day trade is defined as buying and selling the same security on the same trading day, regardless of the number of units.
• By default, if a trader reaches their fourth day trade within five business days, further trades will be blocked to prevent a PDT violation.

Note: Pending orders are included in day trade tracking. For example, if you buy a security and place a sell limit order for the same security, it counts as a day trade even if the sell order hasn’t executed yet, since it cannot be determined whether it will execute after the buy. If the order doesn’t fill on the same day, it will not be counted as a day trade.

What is a “Good Faith Violation”?

A Good Faith Violation occurs when you sell a security before fully paying for it with settled funds. Only cash or proceeds from fully paid-for securities are considered settled.

Example of a Good Faith Violation:

• You buy a stock using unsettled funds and sell it before those funds have settled (typically T+1 for U.S. stocks).
• Since the purchase wasn’t paid for using settled cash, the system flags it as a violation.

Three good faith violation within 12 months will result in your account being restricted for 90 days. During this time, you will only be allowed to place trades using fully settled funds.

How to Stay Compliant

To avoid PDT or good faith violations:

• Keep at least USD 25,000 in settled equity on days you plan to day trade.
• Allow T+1 settlement for U.S. trades before using sale proceeds for new purchases.
• Avoid selling securities bought with unsettled funds unless you have deposited cash.
• Contact our Client Success team if you require any clarification.