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Crypto Terms:  Letter I
Jun 19, 2023 |
updated Apr 02, 2024

What is Instant Buying Power?

Instant Buying Power Meaning:
Instant Buying Power - a good faith system used by brokerage firms to grant users a limited amount of credit during the transfer settlement period.
1 minute

Let's find out Instant Buying Power meaning, definition in crypto, what is Instant Buying Power, and all other detailed facts.

When customers make transactions using automated clearing house (ACH) systems, they can sometimes take several days to settle. This can hinder financial operations for traders that need access in the interim.

To facilitate this, brokerages provide customers with provisional credit in the form of instant buying power. It’s a limited amount of assets that does not exceed the sum being settled. Other criteria, like the customer account type, account balance, and credit score, may impact the amount of instant buying power granted.

Other restrictions may apply to provisional credit distribution. New users may only be eligible to receive a limited amount of instant buying power below their initial transaction amount. The distribution also depends on the deposit time. Users that deposit assets during the weekend may not receive their credits until Monday.

Instant buying power is granted based on the good faith agreement between the brokerage and the customer that the funds will be settled successfully. It can be used for trading in various markets, including stocks and ETFs. However, trading with provisional credits may not be available in derivatives markets like options.