A Reg T call is issued when the initial equity for the purchase of a security is below the minimum required by the Federal Reserve Board. A Reg T call is generated if you have exceeded your SMA or do not have cash available in your account to satisfy the initial margin requirement of 50% for all positions held overnight. You must have adequate available funds if you intend to hold the position overnight.
It is possible to exceed your SMA because TD AMERITRADE gives you access to the greater of your stock buying power or day trade buying power.
Day trade buying power is the amount of funds you can use to day trade intra-day (to open and close a position during the same trading day). Stock buying power is the amount of funds you can use to hold stock overnight. These are two different numbers with different requirements, please be aware of the difference between these two calculations displayed on your account to avoid generating a margin call.
Example:
Your account has $7,500 of available funds, $15,000 of stock buying power, and $20,000 of day trade buying power.
You may use up to $20,000 for day trading (opening and closing a position during the same trading day). This is not the amount that can be used for overnight positions.
For example, you decide to purchase $20,000 worth of ABCD with the intention of selling it at a certain price later that same trading day. However, the stock does not reach the price at which you wished to sell, and you decide to hold it until the following day. The initial margin requirement for this position (as an overnight transaction) was $10,000 (50% of $20,000). Since your available funds equal $7,500, you will have generated a Reg T call for $2,500. You cannot sell ABCD to satisfy the call.
