Federal Reserve Board Regulation T (Reg. T)1 allows an initial margin on stock purchases of 50% regardless of the volatility of the stock (i. e. 2:1 leverage). The margin of retail accounts is typically governed by Reg. T. By contrast, the margin of professional trading accounts is generally governed by something like SPAN. You see that the hedge fund you recently joined maintains both a retail account and a professional trading account. You have been asked by a hedge fund for your advice on which type of account they should open:
If your hedge fund is trying to minimize the amount of capital in the margin accounts, in which account will the low-volatility assets be kept and why?