#What Are the New Margin Requirements from Charles Schwab?
Charles Schwab has introduced a series of new margin requirements aimed at long-short separately managed accounts. These changes are designed to cap the amount of an advisor’s assets that can be allocated to such strategies while also increasing account minimums.
As of March 31, 2026, Schwab reported that $21.3 billion of its total $126.7 billion margin loan balance is linked to registered investment advisor long-short strategies. This indicates a need for stricter controls as the firm reassesses its approach to margin loans, moving towards a risk management paradigm.
#What Are the Key Changes?
The updates were communicated to clients in late April and introduce several concrete limits. Specifically, no more than 30% of an RIA’s total custody assets at Schwab can be directed to long-short separately managed accounts.
Additionally, new margin loan limits have been specified, allowing borrowing at 200% for long positions and 100% for short positions. For example, an advisor with a $1 million client account can borrow up to $2 million for long positions and $1 million for short positions. Moreover, account minimums have been significantly raised; standard Reg T margin accounts now require at least $1 million, while portfolio margin accounts carry a minimum requirement of $3 million.
The most critical of these changes is arguably the 30% allocation cap. For an RIA that manages $500 million in custody assets at Schwab, the maximum investment allowed in long-short SMAs now stands at $150 million.
#Why Is Schwab Implementing These Changes Now?
The shift comes in response to the substantial concentration of $21.3 billion—approximately 16.8% of Schwab's entire margin loan portfolio—in a specific strategy utilized by a subset of advisors. This move indicates Schwab's transition from promoting margin as a potential revenue opportunity to treating it as a risk management necessity, highlighting the rapid growth in these accounts.
Schwab is not alone in tightening margins; Fidelity has previously implemented similar restrictions, albeit Schwab's recent limits are more stringent in several aspects.
#What Do These Changes Mean for Investors and Advisors?
For registered investment advisors, this marks a significant structural shift in how one of the largest custodial platforms accommodates leveraged investment strategies. Advisors who traditionally operated aggressive long-short portfolios at Schwab must now decide whether to reduce their exposure, diversify their strategies across different custodians, or revise their investment methodologies altogether.
For end clients, the heightened minimums suggest a repositioning of long-short strategies to cater primarily to wealthier investors. With $21.3 billion in margin loans now facing increased constraints, many will need to be reallocated or deleveraged. Moreover, unwound short positions will likely create buying pressure on previously shorted assets.