Cash Account

{
  "id": "MLC-T-FIN-000073",
  "term": "Cash Account",
  "field": "Finance and investing",
  "definition": "A cash account is a type of brokerage account in which the investor must pay the full amount for securities purchased. An investor using a cash account is not allowed to borrow funds from his or her broker-dealer in order to pay for transactions in the account (trading on margin).\n\nThe credit extension provisions of the Federal Reserve Board’s Regulation T govern an investor’s use of a cash account to purchase securities. In a cash account, an investor must pay for the purchase of a security before selling it. If an investor buys and sells a security before paying for it, the investor is “freeriding” which is not permitted under Regulation T and may require the investor’s broker to “freeze” the investor’s cash account for 90 days. During this 90-day period, an investor may still purchase securities with the cash account, but the investor must fully pay for any purchase on the date of the trade.",
  "references": [
    "SEC Investor.gov Glossary"
  ],
  "url": "https://mlchart.com/terminology/finance/cash-account/"
}