Which regulator sets the minimum requirement for borrowing in a margin account?

The correct answer is the Federal Reserve Board (FRB) because it is responsible for establishing regulations that govern various aspects of the financial system, including margin requirements for borrowing in margin accounts. Under Regulation T, which is enforced by the FRB, there are specific rules that set forth the minimum amount of equity that must be maintained in a margin account when investors borrow funds to purchase securities.

Specifically, Regulation T sets the initial margin requirement, which is the percentage of the purchase price that an investor must pay with their own funds when buying securities on margin. For example, if the initial margin requirement is set at 50%, the investor must put up at least 50% of the purchase price while the remaining 50% can be borrowed.

Other regulators, such as the SEC, do play a role in overseeing and regulating the securities markets, but they do not set margin requirements. FINRA, while involved in regulating brokerage firms and their practices, also does not establish the initial margin levels, although it may set additional rules that relate to margin account maintenance. The OCC is primarily focused on options regulation and clearing, rather than margin requirements for borrowing in securities trading.

In summary, the FRB is the key regulator that establishes the foundational rules