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IF they are already requiring people to have the cash in their account to cover buys, how can they not have the collateral to cover them. They could have disabled options trading right? But why buying with cash?

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I think the issue is that they're allowing people to use cash right away when they sell, rather than waiting until T+2, and they can't instantly unilaterally change their ToS. They could block people from selling, but not block them from buying, but that would cause all kinds of problems.

As I remember, eTrade also used to not require you to wait until T+2 to reinvest the proceeds from stock sales.

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