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What is Freeriding?
Yanmo avatar
Written by Yanmo
Updated over 3 months ago

What is Freeriding?

When you buy or sell a US stock or an exchange-traded fund (ETF), it typically settles in one working day. Freeriding refers to buying US shares or ETFs and then selling them before the purchase has settled. Freeriding is a violation of the Federal Reserve Board's Regulation T and may result in a suspension of your account on Bamboo.

How does Freeriding affect me on Bamboo?

To prevent you from receiving a Freeriding violation, you will not be able to sell a U.S. stock or ETF within 1 business day of purchase, if the money was taken from your Bamboo Wallet and not your U.S. Stocks Buying Power.

If the money from your Bamboo Wallet was added to balance the money in your U.S. Stocks Buying Power when executing the buy trade, you can sell the value of shares purchased with the money in your U.S. stocks’ buying power within the 1 business day without incurring a Freeriding Violation. However, you may end up getting a Good Faith Violation strike.

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