Free Ride Violations

A Free Ride Violation (FRV) occurs when a cash account uses funds from an ACH deposit to place a round-trip trade, and the ACH is subsequently returned. A restriction will be placed on the account in which the deposit was returned. The restriction will limit your buying power to the settled cash available at the start of the trade date. Additionally, ACH deposits made within the prior 3 days are withheld from buying power because the funds are not considered settled until that time has passed. If funds are used before this (not settled), another Free Ride Violation can be given. If an account has multiple free ride violations, it will be limited to liquidating trades only for 90 days. 


Frequently Asked Questions

What are the repercussions of a free ride violation(s)?

Accounts that have one free ride violation in the previous 90 days will receive an FRV restriction and be limited to trading on settled cash only for 90 days. While in an FRV restriction, all ACH deposits will not be included in buying power calculations for 3 days following the deposit. If an account has multiple free ride violations, it will be limited to liquidating trades only for 90 days.

What is the deposit Return Trigger Timing?

We look back 3 days when there is an ACH return. If the deposit occurred before the 3-day window, Apex (tastyworks' clearing firm) will not calculate free ride violations. If the deposit occurred within the 3-day window, we will calculate any free ride violations on a daily basis that occurred from the deposit date through the return date. For example, if a return occurs on 1/6/2023, we will look for deposits back to 1/3/2023. If the deposit was from 1/3/2023, an FRV may trigger from any day from 1/3/2023 through 1/6/2023.

How many days is my deposit held from my buying power?

When calculating buying power, we will exclude any ACH deposits made in the prior 3 days if an account is under an FRV restriction. For example, when buying power is calculated on 1/6/2023, we will exclude any deposits made on 1/6/2023, 1/5/2023, 1/4/2023, and 1/3/2023.

How to remove an FRV restriction?

At this time, there are no resets available for FRV closing-only restrictions. The restriction will lift 90 days after the closing-only restriction is put in place. Please contact us at support@tastyworks.com with any questions or concerns relating to a free ride violation in your account.