Charles Schwab has rolled out a slate of new margin requirements targeting long-short separately managed accounts, capping how much of an advisor’s assets can be allocated to these strategies and raising the floor on account minimums.

With $21.3 billion of its $126.7 billion total margin loan balance tied to RIA long-short strategies as of March 31, 2026, the firm is pumping the brakes.

What’s actually changing

The new rules, communicated to clients around April 23-24, impose several concrete limits. No more than 30% of an RIA’s total custody assets at Schwab can be allocated to long-short SMA strategies.

Margin loan limits have been set at 200% of principal for long positions and 100% for short positions. In English: if an advisor has $1 million in a client account, they can borrow up to $2 million for long bets and up to $1 million for shorts.

Account minimums got a significant bump too. Standard Reg T margin accounts now require at least $1 million, while portfolio margin accounts demand $3 million.

The 30% allocation cap is arguably the most consequential change. An RIA with $500 million in custody assets at Schwab can now deploy no more than $150 million into long-short SMAs.

Why Schwab is doing this now

That $21.3 billion figure, roughly 16.8% of Schwab’s entire margin loan book, was concentrated in a single strategy type used by a subset of its advisor base. Schwab’s shift from promoting margin as a revenue opportunity to treating it as a risk management concern speaks to how quickly these accounts scaled.

Schwab isn’t the first major custodian to tighten the screws here. Fidelity had already taken earlier actions to restrict similar strategies, though Schwab’s new limits go further in some respects.

What this means for investors and advisors

For the RIA community, this is a structural shift in how one of the largest custodial platforms supports leveraged strategies. Advisors who had been running aggressive long-short books at Schwab now face a choice: scale back, diversify across custodians, or rethink their approach entirely.

For end clients, the higher minimums could be the most immediately felt change. A $1 million floor for standard margin and $3 million for portfolio margin effectively repositions these strategies as offerings for wealthier clients.

With $21.3 billion in margin loans now subject to tighter constraints, some portion of that capital will need to be reallocated or deleveraged. Short positions that get unwound would add buying pressure to previously shorted names.