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119-hr-10553119th CongressWALLET

Margin Eligibility Modernization Act

Sponsored By: Representative Garbarino, Andrew R. [R-NY-2]

Introduced

Summary

This bill would expand margin eligibility to more over-the-counter (OTC) equity securities that have a "ready market." It would direct the Federal Reserve to amend Regulation T within 90 days and create an automatic inclusion rule if the Fed misses that deadline.

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  • Investors and traders: More OTC stocks that meet the ready-market test would count as marginable, widening the set of equities people can borrow against and potentially boosting liquidity for those instruments.
  • Broker-dealers and clearing firms: Firms would need to update margin policies and systems to treat newly eligible OTC equities as margin securities. The bill also forces a temporary automatic inclusion if the Fed does not act within 90 days.
  • Federal Reserve and congressional oversight: After the rule is issued a five-year period begins during which the Fed must report to the House Financial Services Committee and the Senate Banking, Housing, and Urban Affairs Committee on the credit extended because of the rule and any risks to the financial system.

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Bill Overview

Analyzed Economic Effects

2 provisions identified: 2 benefits, 0 costs, 0 mixed.

More margin for OTC stock investors

This bill would make many over-the-counter (OTC) equity stocks count as margin-eligible if they have a "ready market" as defined in federal rules (17 CFR 240.15c3-1(c)(11)). The Federal Reserve would have to issue a rule changing Regulation T (12 CFR 220.2) within 90 days of enactment. If the Fed did not issue the rule in 90 days, those OTC stocks would be treated as margin-eligible until the Fed issues the rule. If enacted, this would let investors and broker-dealers borrow against a broader set of OTC shares and could change market risk for people who hold or borrow on such stocks.

Five-year Fed report on margin rule

This bill would require the Federal Reserve to send a report to two congressional committees five years after the new margin rule is issued. The report would assess the credit extended because of that rule and any risks to the financial system. The report must go to the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs. This is an oversight requirement and would not itself change margin rules or directly cost households.

Sponsors & CoSponsors

Sponsor

Garbarino, Andrew R. [R-NY-2]

NY • R

Cosponsors

  • Rep. Lawler, Michael [R-NY-17]

    NY • R

    Sponsored 10/9/2026

Roll Call Votes

No roll call votes available for this bill.

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